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Ask Terry L. Your Own Question

Terry L.
Terry L., Attorney
Category: Bankruptcy Law
Satisfied Customers: 2505
Experience:  Better Business Bur 15yrs bankruptcy experience. Chicago Bar
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Can a chapter 7 Bankrutpcy Trustee take more money than I owe

Resolved Question:

Can a chapter 7 Bankrutpcy Trustee take more money than I owe my creditors?
Submitted: 1 year ago.
Category: Bankruptcy Law
Expert:  Terry L. replied 1 year ago.

Terry L. :

Hi, thanks for your question. You should hire a lawyer for specific legal advice. No attorney client relationship is created here.

Terry L. :

Chapter 7 trustees liquidate assets for the benefit of creditors.

Terry L. :

The trustee takes a reasonable fee, and can also collect for legal services on behalf of the bankruptcy estate.

Terry L. :

These are motioned up before the court to approve.

Terry L. :

The creditors, may get a small amount of interest if there is surplus assets, usually prime rate. This doesn't happen often though.

Terry L. :

So, yes, the creditors can be paid 100% of what is owed, and the trustee gets a set percent under the code.

Terry L. :

So yes, the answer to your question, is that the trustee could liquidate more than 100% of the total debt, to cover the trustee costs and legal.

Terry L. :

did you have any followup questions?

Customer:

My Dad died after I filed bankruptcy. I now have more than enough to pay off my creditors. The Trustee now has 5400.00 more than I owe my creditors.

Terry L. :

I see

Terry L. :

You can watch the motions for compensation for reasonableness, but the court usually monitors that

Terry L. :

Sorry for your loss

Customer:

Can he take my money or does his share come out of what is owed the creditors.

Terry L. :

Any surplus after liquidation and trustee costs are returned to you

Terry L. :

it's a total pot, so if say 100,000 in assets, and 80,000 in debt and 5000 for trustee. the debt would be paid, and the trustee would be paid.

Terry L. :

The trustee gets first dip, then the creditors share in the remaining pot

Terry L. :

up to 100% based on the filed claims.

Terry L. :

if creditors don't file, they are discharged and those funds are not paid out to them

Customer:

I don't understand why I have to pay the Trustee. I didn't hire him.

Customer:

I owed 33,600. And I have to pay him over and above that?

Customer:

What would be his cut?

Terry L. :

The trustee gets a percentage under the bankruptcy code to do all the liquidating. Unfortunate, but that is what congress allows under the bankruptcy code for trustee compensation.

Terry L. :

It's a sliding scale based on the amount of assets liquidated.

Terry L. :

the amounts are here

Terry L. :

that is the flat amount.

Customer:

Hi liquidated nothing. It's all been in cash.

Terry L. :

The trustee often 'hires' his own firm to advise the trustee on legal matters in the case, and can get compensated for that work, based on motion for approval with the bankruptcy court.

Terry L. :

Thats the generic term - liquidating assets.

Customer:

ok

Terry L. :

Paying out cash assets falls under that heading.

Terry L. :

The timing of this sucks, I know.

Terry L. :

inheritances are assets for 6 months after the case if someone passes in that 6 month window

Customer:

So the answer to my question is that the Trustee CAN take my money over and above what I owe my creditors?

Terry L. :

yes

Customer:

I'm going to look at your link.

Customer:

ok. Thanks.

Terry L. :

ok cool.

Terry L. :

let me know if you have any other questions.

Terry L. :

Thanks and good luck to you.

Terry L. :

Terry

Customer:

Later.

Terry L., Attorney
Category: Bankruptcy Law
Satisfied Customers: 2505
Experience: Better Business Bur 15yrs bankruptcy experience. Chicago Bar
Terry L. and other Bankruptcy Law Specialists are ready to help you

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