How Does the Bankruptcy Trustee Get Paid?

A trustee's fee structure depends on whether you file for Chapter 7 or Chapter 13 bankruptcy.

Updated by , Attorney

The bankruptcy trustee is responsible for overseeing a filer's bankruptcy case and, of course, gets paid to do the job. But it's fair to say that the trustee's interests align more closely with bankruptcy creditors than those of the debtor. In bankruptcy, trustees receive the following:

  • a percentage of the property sales proceeds dispersed to Chapter 7 creditors, and
  • up to 10% of the monthly amount paid to Chapter 13 creditors.

As you prepare for the creditors' meeting, be sure to review the questions asked in a 341 meeting. Then check out 341 Meeting of Creditors Explained—it will help guide you through the creditors' meeting process.

How Does a Chapter 7 Bankruptcy Trustee Get Paid?

A Chapter 7 trustee receives $60 for each Chapter 7 case assigned to them, which isn't much considering the trustee is responsible for doing all of these things:

  • reviewing bankruptcy paperwork
  • verifying supporting documents
  • conducting the meeting of creditors, and
  • identifying assets to sell for creditors.

In addition, trustees must administer some matters for free because the $60 payment comes out of the filing fee the debtor pays at the start of the case. If the filer qualifies for a fee waiver, the trustee receives nothing.

But that's not the only way a trustee makes money. The trustee receives commissions on property sold for the debtor's creditors, and the amount received can add up to a significant payday. Here's the payout chart:

  • 25% of the first $5,000 distributed
  • 10% of any amount between $5,001 and $50,000
  • 5% of any amount between $50,001 and $1,000,000, and
  • 3% of all amounts over $1,000,000.

This is the maximum compensation allowed, and, if the trustee's commission seems too generous, a party can ask the court to reduce the trustee's fees.

Also, the trustee can't sell all of the debtor's property. The trustee is limited to selling assets that aren't protected by bankruptcy exemptions. You can determine whether your property is at risk by learning about property in Chapter 7 and reviewing the property covered in your state.

How Does a Chapter 13 Bankruptcy Trustee Get Paid?

The trustee in a Chapter 13 case doesn't sell property to pay creditors. The Chapter 13 trustee receives a percentage of the debtor's monthly plan payments. The exact rate depends on the trustee, but the maximum that a Chapter 13 trustee can collect is ten percent of the plan payments.

Protections are in place to prevent Chapter 13 trustees from receiving unreasonably large payments. The Attorney General limits the Chapter 13 trustee's yearly salary to the amount paid to federal employees at level V of the Executive Schedule (plus the value of employment benefits). To learn more about how Chapter 13 plans work, see The Chapter 13 Repayment Plan.

Navigating Your Bankruptcy Case

Bankruptcy is an unusual area because it's essentially a qualification process. The laws provide instructions for completing a 50- to 60-page bankruptcy petition, and because all rules apply in every case, you can't skip a step.

One way to keep track of your research is to use the bankruptcy forms as an outline. You'll find links to bankruptcy forms and other resources in the chart below. You can also look at the list of Chapter 7 and 13 bankruptcy forms to see where this topic fits in the bankruptcy scheme (it's a post-filing issue). And this handy bankruptcy document checklist will help you gather the things you'll need to complete the petition.

341 Meeting of Creditors Information

Bankruptcy Forms

The bankruptcy court tells creditors about the creditors' meeting and other important dates using these forms:

Notice of Chapter 7 Bankruptcy Case

Notice of Chapter 13 Bankruptcy Case

Related Information

Bankruptcy Document Checklist

The 341 Meeting of Creditors Explained

Questions to Expect at the 341 Meeting

What Happens If the Bankruptcy Trustee Files an Objection to Your Discharge?

What Happens After the 341 Meeting?

Need More Info?

We want to help you find the answers you need. Go to TheBankruptcySite for more easy-to-understand bankruptcy articles, or consider buying a self-help book like The New Bankruptcy by Attorney Cara O'Neill.

We wholeheartedly encourage research and learning, but online articles can't address all bankruptcy issues or the facts of your case. The best way to protect your assets in bankruptcy is by consulting with a local bankruptcy lawyer.

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