Bankruptcy trustees play a significant role in both Chapter 7 and Chapter 13 cases. It’s their job to make sure that debtors are honest and have followed all of the applicable laws and procedures.
The specific responsibilities of the trustee depend upon the type of bankruptcy case filed, but in all cases they have the authority to make important decisions. Since your trustee could end up having a major impact on the outcome of your case, you may want to learn more about how they’ll be involved. Below, you’ll find the basics on bankruptcy trustees.
Who Acts as a Bankruptcy Trustee?
The U.S. Trustee Program, which is part of the Department of Justice, is tasked with monitoring the conduct of the parties involved in bankruptcy cases. Local offices appoint private individuals and corporations to act as trustees, ensuring that debtors have an impartial party – not a government employee – overseeing the bankruptcy process.
Duties of a Trustee in Chapter 7 Bankruptcy
In a Chapter 7 case, the bankruptcy trustee has a number of responsibilities. Their job includes:
_ Reviewing the bankruptcy petition
_ Verifying the debtor’s identity and financial information
_ Conducting the meeting of creditors
_ Collecting and selling non-exempt assets
_ Distributing proceeds to the creditors
Duties of a Trustee in Chapter 13 Bankruptcy
In a Chapter 13 case, the debtor engages in a repayment plan. Therefore, instead of selling assets for the benefit of the creditors involved, the bankruptcy trustee’s main duties include:
_ Reviewing the proposed repayment plan
_ Ensuring the accuracy of the budget and other schedules
_ Facilitating the meeting of creditors
_ Collecting payments from the debtor
_ Distributing funds to the creditors
Working with a Bankruptcy Trustee
When you file for Chapter 7 or Chapter 13 bankruptcy, you’ll receive a notice from the court with the contact information for the trustee appointed to your case. But in all likelihood, you won’t meet or speak with them until the meeting of creditors. In most cases, aside from the meeting of creditors, your attorney will communicate with the Trustee on your behalf.
At the meeting of creditors, you’ll be questioned under oath. The trustee may ask about any red flags raised by your paperwork, such as the value of a particular asset, a recent property transfer or a discrepancy in income calculations. If you’re open and honest, you shouldn’t have to worry about the progression of your bankruptcy case. Working with a good attorney helps to make the interview go smoothly.
How Utah Bankruptcy Trustees Get Paid
Learning more about how bankruptcy trustees are involved in Chapter 7 and Chapter 13 cases could be to your benefit, as a court-assigned trustee a will oversee your case.
Now that we have explored the role and responsibilities of the bankruptcy trustee, let’s take a look into how compensation works for the individual assigned to this role. It might surprise you to learn that the court doesn’t provide payment. Instead, the debtor bears the cost. Fortunately, this isn’t a burden.
Here’s how the bankruptcy trustee gets paid.
Trustee Compensation in Chapter 7 Bankruptcy
The trustee in a Chapter 7 bankruptcy receives a $60 administrative fee, which comes out of the filing fees the debtor pays to the court. In a no-asset case – one in which the debtor has no non-exempt property – this is the only payment the trustee receives.
When a debtor has non-exempt assets that can be sold, however, the trustee receives a commission based on the amount of the proceeds. Compensation is calculated on sliding scale, as follows:
_ 25 percent of the first $5,000 disbursed to creditors
_ 10 percent of any amount over $5,000 and less than $50,000
_ 5 percent of any amount in excess of $50,000 yet below $1 million
_ 3 percent of any amount greater than $1 million
To be clear, the commission for a Chapter 7 trustee doesn’t come directly from the debtor. The money comes out of the proceeds from the sale of the debtor’s non-exempt property, and the payment structure is what motivates trustees to flush out and sell all assets not subject to the state’s bankruptcy exemption laws.
Trustee Compensation in Chapter 13 Bankruptcy
The trustee in a Utah Chapter 13 bankruptcy doesn’t sell the debtor’s non-exempt assets. As there are no proceeds from the sale of property, compensation is incorporated into the debt repayment plan.
In exchange for administering a Chapter 13 case, the trustee receives a percentage of the total paid by the debtor each month. The exact percentage varies by district, but the maximum a trustee can earn is 10 percent of the repayment amount.
As with a Chapter 7 bankruptcy, paying the trustee in a Chapter 13 case doesn’t put the debtor under financial strain. The fees are a part of the repayment plan, not an additional expense.
The Bottom Line
The duties performed by a bankruptcy trustee can have a significant impact on the outcome of your case. But, you don’t need to be all that concerned about trustee compensation, as you won’t get a separate bill for their payment.
Building a positive relationship with your trustee is essential, as they have the power to recommend that the court dismiss your case. But for an easier path down the road to debt relief, you’ll want an experienced attorney at your side – and the professional team at the Law Office of Davis & Jones, P.C., is ready to provide the legal services you need.
If you have questions about bankruptcy, the Law Office of Davis & Jones, P.C., can provide the answers you need. Our legal team has decades of experience helping Utah residents obtain debt relief through Chapter 7 and Chapter 13 bankruptcy, and we’d be happy to assist you in resolving your financial difficulties.
Contact our Salt Lake City office today to learn more about how we can assist you with an affordable Utah bankruptcy filing.