In a Chapter 7 bankruptcy, the trustee’s fee is set by federal law as a sliding percentage of money distributed to creditors from liquidated assets. If nothing is liquidated, the trustee receives a flat $60 taken from the filing fee you already paid. That is what happens in roughly 95% of Chapter 7 cases, so for most filers the Chapter 7 trustee fee costs nothing out of pocket beyond what the court has already collected.
The Sliding-Scale Formula
When the trustee does distribute money to creditors, the maximum fee comes from 11 U.S.C. § 326. The percentages work like tax brackets, applying only to the dollars inside each tier:1Office of the Law Revision Counsel. 11 U.S. Code 326 – Limitation on Compensation of Trustee
- 25% on the first $5,000 disbursed
- 10% on amounts above $5,000 up to $50,000
- 5% on amounts above $50,000 up to $1,000,000
- 3% on anything above $1,000,000
Two things to keep in mind. The percentage runs on money “disbursed or turned over” to parties in interest, which includes secured creditors but excludes any money returned to you. And these are ceilings. The court decides the actual award and can grant less than the statutory maximum.2Office of the Law Revision Counsel. 11 U.S. Code 330 – Compensation of Officers
A Worked Example
Say the trustee sells non-exempt property and distributes $30,000 to creditors. The maximum fee is:
- First $5,000 × 25% = $1,250
- Next $25,000 × 10% = $2,500
- Total: $3,750
That is 12.5% of the distribution. The effective rate falls as the estate grows. A $100,000 distribution produces an $8,250 maximum, or 8.25%, because most of the dollars fall inside the 5% tier. The structure rewards trustees more on smaller estates than larger ones, which shapes which assets they consider worth selling.
No-Asset Cases and the $60 Flat Fee
If the trustee liquidates nothing, the percentage formula produces zero. In its place the trustee collects a flat $60: a $45 base payment plus a $15 surcharge set by the Judicial Conference, both drawn from your filing fee.2Office of the Law Revision Counsel. 11 U.S. Code 330 – Compensation of Officers3United States Courts. Bankruptcy Court Miscellaneous Fee Schedule
Most Chapter 7 filers land here, because most can protect everything they own through exemptions. If your attorney has confirmed all your property is exempt, the trustee’s compensation is already built into what you have paid the court.
What Pushes a Case Out of the No-Asset Category
The trustee can only sell property you cannot protect with an exemption. Exemption rules vary by state. Some states let you choose between the federal exemption list and the state list; others require the state list.4Justia Law. Federal Bankruptcy Exemptions
Commonly protected items include equity in a primary residence, retirement accounts, a vehicle up to a set value, and household goods. Anything above the available exemption amount is reachable. How well your exemptions are applied is the main factor in whether a trustee fee ever enters the picture.
Transfers the Trustee Can Recover
Non-exempt property is not the only source of funds subject to the fee. Trustees can pull money back into the estate from certain transfers you made before filing, and recovered funds count toward the distribution the fee is calculated on.
Preferential Transfers
If you paid one creditor ahead of others shortly before filing, the trustee can claw that payment back. The window is 90 days for ordinary creditors and one year for insiders such as family members or business partners.5Office of the Law Revision Counsel. 11 U.S. Code 547 – Preferences Repay your brother $5,000 two months before filing and the trustee can demand he return it for distribution to all creditors.
Fraudulent Transfers
Transfers made to put assets beyond creditors’ reach, or made for far less than fair value, can be unwound within a two-year federal lookback.6Office of the Law Revision Counsel. 11 U.S. Code 548 – Fraudulent Transfers and Obligations State fraudulent transfer laws often reach further back, and the trustee can use whichever lookback is longer. Selling a boat to a friend for $500 eighteen months before filing is the kind of transaction trustees look for.
Why Small Assets Often Get Left Alone
When assets are sold, the trustee’s fee and other administrative expenses are paid before most creditor claims. Under 11 U.S.C. § 507, administrative expenses rank second in priority, behind only domestic support obligations such as child support and alimony.7Office of the Law Revision Counsel. 11 U.S. Code 507 – Priorities
Trustee fees, court costs, and professional fees for attorneys or accountants hired by the estate all come off the top. Because of that, a trustee generally will not liquidate an asset unless the expected proceeds meaningfully exceed the sale costs plus the fee. If selling your used car would net $2,000 but cost $1,500 in administrative overhead, the trustee will likely abandon it and leave it with you.