How a Bankruptcy Trustee is Paid
The bankruptcy laws actually set out the manner to where a bankruptcy trustee will be paid for administering a case. The sources, compensation amounts as well as the payment methods differs depending if you are in Chapter 7 or Chapter 13 of bankruptcy.
In Chapter 7 cases, the bankruptcy trustee will be paid in two ways, which depends if there are assets administered on your case or not.
One of these ways would be where the trustee will receive a $60 administrative fee that comes from the bankruptcy filing fees that are being paid to the court clerk when you will file the case (being based as of June 2018). The trustee will not be able to acquire the administrative fee if the court waives the filing fee.
The other one is through getting a percentage on the bankruptcy assets. This would be where a Chapter 7 trustee is going to get a commision based with the bankruptcy assets which are sold for the benefit of its creditors. The trustee is going to get a portion of the profits. When theres no asset which the trustee could sell and if in case the trustee cannot recover money through tax refunds, lawsuits or other actions, theres no other fee paid to the trustee. The commission actually comes from the money which have been collected from the sale of the nonexempt assets or properties that is not protected from the sale by a bankruptcy exemption or perhaps the recoveries on lawsuits that were brought by the trustee.
In case the trustee collects the assets of the case, sells it and makes payment to its creditors, the trustee will be able to get a commission based on the money thats been collected. The amount of it however depends on the funds that were disbursed by parties having interest. You don’t need to make extra payments to the court just to cover up the commission of the trustee in Chapter 7.
For them to be paid, the trustee will file an application for compensation with the bankruptcy court. All parties interested and creditors are going to get a notice with regards to the amounts which have been requested. When there is no one who objects or after the court has held a hearing about the objections filed, the court later on will review the fee on the trustees application and then will enter an order that awards the fee.
Chapter 7 trustees could also recover costs on the expenses like through the professional accounting fees. Like the commissions, it only happens after the trustee is going to file a fee application as well as a request on the reimbursement costs and if this is going to get approved by the court after the notice from all the parties in the bankruptcy case.