How Does My Chapter 13 Bankruptcy Trustee Get Paid?
By Jill Michaux, Kansas Bankruptcy Attorney on Nov 9, 2008 in General Bankruptcy Information
Chapter 13 trustees manage payment plans by debtors. They take in money from debtors and pay out money to creditors. How does your chapter 13 bankruptcy trustee get paid, you wonder? The trustee is paid a commission out of the money you pay the trustee.
A chapter 13 bankruptcy trustee keeps a percentage of the dollars through flow through the program. The bankruptcy code says the fee is capped at 10%. Fees range from 2.6% in the Western District of Pennsylvania up to the 10% maximum fee, which can actually be 11.11% if it is calculated upon receipts instead of disbursements. They vary from trustee to trustee.
The fee is determined by the gross dollars handled by the chapter 13 trustee and the annual budget for the trustee’s office. All the staff salaries and benefits and the office overhead are paid from the fees as well as a commission to the trustee, who is an independent contractor appointed by the government.
The chapter 13 plan payment must be high enough to pay the trustee percentage fee on top of the creditors that are projected to be paid. The fee is set by the U.S. Trustee and is adjusted from time to time, which can cause plan payments to increase. Some trustees require the plan be calculated using the maximum fee.
San Diego Bankruptcy Attorney Michael Doan discusses the compensation scheme for chapter 7 trustees.
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