If you are considering filing for bankruptcy, you must prepare to work with a bankruptcy trustee for the entirety of your case. Your trustee will oversee your case at each stage, acting as an administrator for legal procedures and a communicator between all parties involved. If you qualify for Chapter 7, your case will likely only last a few months. However, if Chapter 13 is your best option for filing for bankruptcy, your plan will last three to five years, and you will work with your bankruptcy trustee throughout that period. Behm Law Group, Ltd. can help you throughout the process of filing for Chapter 13 bankruptcy in Owatonna, MN, as well as provide information about the role of your trustee.
Your trustee is a government-appointed administrator for your bankruptcy case, and the trustee is compensated for his or her work in your case in a number of ways. In a Chapter 7 case, a trustee is compensated with a combination of fees and asset sales. With reorganization bankruptcy, the trustee cannot rely on asset sales, and because a Chapter 13 case lasts several years, the trustee must find compensation from other sources.
Plan Payment
The primary source of compensation for a standing trustee in a Chapter 13 case is through the repayment plan. A certain percentage of the monthly payments you make for your repayment plan go to compensate the trustee handling your case. This percentage is limited to a maximum of 10% of any plan payment amount. In certain cases, 10% of a monthly plan payment is a hefty sum; however, the trustee’s salary is currently limited to $145,000 a year, and the percentage of monthly compensation is adjusted to remain within this limitation.
The costs of operating a trustee’s office, the costs of any parties the trustee hires within your case, and any other costs incurred in your case are covered by the compensation paid to the trustee from your monthly plan payments and the plan payments from other chapter13 cases that the trustee is administering. A trustee may have thousands of cases to administer.
Operating Budgets
At the start of your case and throughout the period of your Chapter 13 repayment plan, your trustee must file operating budget proposals to the Office of the United States Trustee. These proposals give budget information that includes all costs incurred during not only your repayment plan period but also the repayment plan periods of other cases the trustee may be administering. When the trustee’s operating budget is approved, the trustee is given permission to take a percentage of your monthly payments that will serve as total trustee compensation. This percentage may change if the budget changes throughout your 3 to 5 year-long plan.
If you are considering filing for Chapter 13 bankruptcy in Owatonna, MN, and would like to learn more about the process and the roles of your trustee and attorney, contact Behm Law Group, Ltd. at (507) 387-7200 today.
