You’re considering personal bankruptcy but are worried about the trustee’s fees? Your question is valid and relevant and we are here to give you all the information which you need.
First of all, we would like to start by reassuring you. The trustee’s fees are set by the bankruptcy and insolvency law . Their salary is therefore drawn from the funds accumulated in your file when your trustee acts as the administrator of a consumer proposal or bankruptcy. Many services are offered by the insolvency trustees and the fees vary according to each file. As each file is unique, it is rather difficult to determine what the average fee of a trustee is.
On the other hand, our experienced financial advisors are happy to bring some light to the subject. Discover all there is to know about trustee fees.
Summary bankruptcy and trustee fees
A personal bankruptcy is said to be summary when assets are less than $ 15,000. This is the most common type of personal bankruptcy and according to Rule 128, fees are based on assets.
The trustee is entitled to 100% of the first $975 of all receipts. Then it’s 35% between $975 and $2,000, and then 50% up $2,000. For example, for assets of $3,500, here is how the trustee’s fees are calculated.
- 100% of the first $975 equals $975 fixed for the trustee;
- 50% of excess revenue exceeding 2,000 is calculated as follows: (3,500 – 975) / 2 = $1,262.50
- Fees are $2,237.50 for assets of $3,500.
Fees and ordinary bankruptcy
Whether it is a commercial bankruptcy or personal, if the assets exceed $15,000, the trustee’s fees will be equal to 7% of the assets as well as any other remuneration approved by the court and the creditors. The actual disbursements incurred are part of this compensation and your trustee can ask for collateral, deposits if the assets are insufficient or seem questionable.
The consumer proposal and the proposal
If you can afford the consumer proposal, it is an excellent solution to avoid bankruptcy. The trustee’s fees are still determined by the Bankruptcy and Insolvency Act, but the consumer proposal is always a better solution than bankruptcy if you can take this route.
Here’s how the trustee’s fees are calculated for administering a consumer proposal. Its calculation is very similar to the summary bankruptcy:
- 100% of the first $1,500;
- 20% of all amounts paid to creditors that surpass the first $1,500;
For a $3,500 consumer proposal, here is your calculation.
- $1,500 for the first $1,500;
- 20% of the $2,000 extra ($400);
- For a total of $1,900;
With respect to the proposal, the fees are decided on the basis of an agreement between the trustee and the debtor. They must be approved by creditors and the court. So it is difficult to talk about average fees here since each file is different.
There may be exceptions for trustee fees, particularly in personal contracts. In this case, the fees are usually decided like any professional work, between the individual and his trustee.
For any questions regarding trustee fees, do not hesitate to contact us. An experienced member of our team will answer your questions with great pleasure.