how much would ch. 7 trustee get paid?

[Ws2006]

Building is for sale for $1,050,000

Loan on the building is $750,000

So leaves $300,000

2 questions..... Does the trustee get paid off the 1mill price or the profit it brings to give creditors? If so how much will it be around

Second, Does the trustee pay the loan payment that hasnt been paid for the past 8 months or just gives them the $750,000 chunk


Also how much does the trustees lawyer get paid and the real estate agent?



Thanks in advance

[despritfreya]

1. A Trustee gets paid a statutorily set amount based upon the disbursements he makes to creditors, including secured creditors and interested parties (but not the debtor). This would include a disbursement to the lien holder of the building if such payment is deemed to have been made by the Trustee. Normally the lien holder is paid by the escrow company, which, is not a disbursement by the Trustee. HOWEVER, Courts have held that the escrow company is an agent of the Trustee therefore the payment is a disbursement and the Trustee is entitled to his percentage.

The percentage paid to a Trustee is governed by 11 USC 326(a) and is as follows:

25% of the 1st $5K
10% of any amount between $5K and $50K
5% of any amount between $50K and $1M and
"reasonable compensation not to exceed 3%" for amounts over $1M

2. If the Trustee has funds in the Estate he may elect to pay the loan payments or the delinquent payments may just get rolled into the payoff and paid at close of escrow.

3. The Trustee’s attorney is paid on an hourly rate and will file an Application for Approval of Fees. It is what it is.

4. The realtor gets paid whatever commission is set in the contract. If the commission is to high, the Court can reduce it but that rarely happens.

Des.

[Ws2006]

Des we talked about this!!! All this reading gives me a headace! lolllllll

J/k

So he will get paid on the 300,000 profit and not full 1,000,000 sale price??? Cuz damn that would be like $70,000! Thats not fair! loll

[despritfreya]

So he will get paid on the 300,000 profit and not full 1,000,000 sale price???

No. He will get paid on what he "disburses" which presumably means the entire sales price. The money comes in and then goes out. ALL of the sale proceeds will be "disbursed" either through the Trustee or his "agent" (escrow company - if your jurisdiction follows what mine does). The only time a Trustee does not get a cut is when he returns funds to a debtor. So, yes, there is a mint to be made.

Des.

[Ws2006]

Always great info Des!

What about the person who carried the loan.

Does the trustee pay him the 750 he is owed or 750 plus all the months he wasnt paid for the mortgage?

[despritfreya]

What about the person who carried the loan. Does the trustee pay him the 750 he is owed or 750 plus all the months he wasnt paid for the mortgage?

The lien holder gets paid whatever is owed. Just like in any sale of real estate, the lender will supply a payoff statement to the title company which will include the principal balance, accumulated late fees, accumulated interest etc. Now, will the lender agree to reduce the amount owed. . . highly unlikely if it is an institutional creditor. As to a private investor. . . probably not but you never know what kind of a deal a Trustee might cut.

Des.

[chicagoannie]

Des - I am curious. How do attorneys become trustees? I know they are not elected. Also - do they take on all the extra work/headaches for the extra pay? Tks for ino.

[tcreegan]

Hi all,

...just to keep things in perspective, for no-asset cases they get a whopping $60 per case....

Tom in Colo

[despritfreya]

How do attorneys become trustees? I know they are not elected. Also - do they take on all the extra work/headaches for the extra pay? Tks for ino.

A Trustee does not have to be an attny. Some are accountants or bankers. Usually they have either a financial or legal (or both) background. They apply for the job through the USDOJ just like anyone looking for a job, but usually they have some connection with the UST for that district. While it is not an "insider" type thing, knowing someone on the inside does help. What really helps is: If you are an attny with experience in the system you have not rocked the boat. I tried once to get into the UST's office knowing my application would go no place since, in the past, I have pissed off one or two in that office - at least that was my belief - alas, their loss (LOL).

Trustees get a salary paid by your tax dollar (at least 13 Trustees - I assume it is the same for 7 Trustees but I am not positive) but they are quasi government employees. They must run their own office, pay their own employees and other overhead, including the attorney they hire to help with the case. The reason they quickly shut down a no asset case (as alluded to by Tom) is that it costs them money to keep it open. When they get a big case they are very happy. The big cases however are, for the most part, few and far between.

Des.

[BROKEDED]

Of course, when you see 180 chapter 7s on the docket for 5+ hours of trustee time...........180 x $60 = $10800 / 5 hours = $2160 per hour......that's no chump change. I realize that money is divided out by more than just their 341 appearances but you're talking about alot of money passing under the Trustee's nose. VOLUME BABY VOLUME!!!