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Trustee fee

Is the trustee fee for bankruptcy the same however complex the procedure may be? Is it the same for a wage earner holding no assets as it is for a businessperson with an incorporated business and seizeable assets inside and outside the corporation and a number of questionable transactions?

Is the trustee obliged to give me a fee quote upfront before the procedure starts or can he bill the estate whatever is reasonable as the bankruptcy proceeds?

Finally can a trustee discharge himself from the bankruptcy leaving me in limbo if there is no money in the estate to pay his fees?

Posted from: Ontario

One Response to “Trustee fee”

Barton Goth GCO Bankruptcy Trustees said...

First lets deal with the trustee fee.

The amount you are required to contribute to your estate while bankrupt depends on a number of factors.

First, most trustees will require you to make a minimum contribution each month for as long as you are bankrupt; the minimum bankruptcy period is nine months.

Second, you are required to make an additional payment based on your take home pay each month, and the size of your family. The more you earn, the more you are required to pay each month. You will be required to send the trustee copies of your pay stubs and other income each month, and each month the trustee would calculate the surplus income payment.

Third, you would lose any tax refunds or GST credits you are otherwise eligible for during the bankruptcy period.

Fourth, you lose certain assets (certain RRSPs, valuable cars. etc) that you own when you go bankrupt.

As you can see, the cost of a bankruptcy depends on a number of factors. As a result the trustee can often give you a quote of the expected fee based on existing information / circumstances, but there are things that are difficult to predict (i.e. tax refunds, gst credits, lottery winnings, inheritances etc) that you will have to be prepared for.

In terms of a trustee being able to discharge himself, this is regularlly done with people who file a bankruptcy and then do not live up to their obligations. The result is that the person is left in bankruptcy and the rights of the creditors are reinstated. The trick to avoiding this is to make sure you keep up with what you have committed to do.