HOW ARE BANKRUPTCY TRUSTEES PAID?

Chapter 7 trustees and Chapter 13 trustees are paid differently.  Chapter 7 trustees are paid based on a percentage of what they are able to collect for the bankruptcy estate.  This means that the more money they are able to collect in a particular case, the more money they get paid.  Chapter 7 trustees are highly incentivized to find and take assets because they are able to keep a percentage of what they collect.  Chapter 7 trustees also receive a nominal amount ($60 per case) for each case they administer regardless of whether they collect any property or not.  In cases where they collect money they receive the following percentages for their fees:

  • 25% of the first $5,000;
  • 10% of the next $45,000;
  • 5% of the next $950,000; and
  • 3% of the balance.

Chapter 13 trustees are paid differently.  They take a percentage of each plan payment made in every case that they administer.  Generally, they take between five and ten percent of whatever the debtors’ plan payments are.  This means that every plan payment is slightly higher than it would be otherwise because the trustee’s portion of each payment is built into each payment.

 

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