The answer to this common bankruptcy question is that it depends on what kind of bankruptcy you are filing. In bankruptcy there are a number of different trustees – and it can sometimes get confusing if you don’t deal with them everyday. There are Chapter 7 Trustees, Chapter 11 Trustees, Chapter 12 Trustees, and Chapter 13 Trustee’s – in addition to the US Trustee – but that is for another blog article. But for this blog lets just focus on the two most common bankruptcy trustee’s the Chapter 7 and Chapter 13 trustee.
So in a Chapter 7 case the Chapter 7 trustee is paid in two ways depending upon if there are assets in your case or not. By the administrative case fee and the commission based on a sliding scale, and also by cost reimbursements. Basically a portion of the filing fee that you have to pay to file a bankruptcy case is allocated for the Chapter 7 Trustee. Then any other assets he can collect can be sold and he is able to be reimbursed for his time and efforts by submitting a bill to your bankruptcy estate. A bankruptcy judge then is supposed to determine if the amount the trustee is paid out of the assets is fair to the you and the creditors.
In a Chapter 13 case the standing Chapter 13 trustee is part of a payment plan in which you pay each month under the Chapter 13. The fee allocated to the chapter 13 trustee is controlled by capping maximum percentage of plan payment, a budget approval, and a limitation on the trustee’s salary. If you followed all that then you get a star. Bottom line however is that you are actually paying the trustee out of the funds you are paying into your chapter 13 bankruptcy case. Usually we estimate those fees to be about 10% of your plan payment but depending on the trustee is could be closer to 6.5%.
So who pays the bankruptcy trustee — as in most things you do.