Many people, mostly those who haven't declared bankruptcy, never become familiar with the term "bankruptcy trustee." If you are thinking about filing for chapter 7 bankruptcy, or have already filed, it's in your best interest to understand the role this important person plays in your financial affairs. In particular, the connection between the bankruptcy trustee's compensation and your property should be of vital interest to any filer. Read on to learn more about the role of the bankruptcy trustee.

The Property Inspection

Often, the first (and only) interaction you will have with a trustee is at your creditor's meeting. For a select number of filers, however, you may first meet your trustee at a property inspection, usually scheduled a few weeks after you file. The purpose of this inspection is to verify the location, condition and value of property that you have, and the potential for that property to be used to pay off some of your bankruptcy debts. It's important to note that no property will be taken at the inspection; any property targeted for seizure will be scheduled for surrender at a later date. Mostly, the inspection will consist of the trustee, or their representative, taking photos and making notes.

The Trustee's Compensation

The amount of interest the bankruptcy trustee shows in your real estate, vehicles, boats, jewelry, art and other items is directly related to how much of that property may be seized and sold. Some of your property is exempt, but some of it may not be. Not only is the trustee bound by law to collect as much as possible to help pay your creditors, but the seizure of property is actually how the trustee gets paid for the job.

The amount that the trustee may earn (called a commission) is based on a percentage of the property's value and this calculation is mandated by federal law. The trustee earns:

• 25% on the first $5,000.00
• 10% on $5,000.00 - $50,000.00
• 5% on $50,000.00 - $1,000,000.00

If there is no property available, the trustee still gets $60.00 per bankruptcy case.

The Creditor's Meeting

Many people will only come into contact with the trustee at the creditor's meeting. There, the trustee will preside over the meeting and question each filer about their finances, their bankruptcy petition, and their federal tax filing status. If a creditor doesn't appear at the meeting (which is rare), another meeting to work out any issues will be scheduled by the trustee.

Your contact with the trustee will likely be very limited, but make sure that you discuss the role of the trustee and any other questions you have about your bankruptcy with an attorney like D Derk Demaree Attorney at Law.