Matter of Weaver

Jun 28, 1990
16-80382
Versions:118 B.R. 730
1990 WL 129422
1990 Bankr. LEXIS 2786

MEMORANDUM

JOHN C. MIN AH AN, Jr., Bankruptcy Judge.

This Chapter 13 case is before the court for consideration of the Trustee’s Objection to the Third Amended Plan (Fil. # 25). The dispute involves calculations of the trustee’s ten percent (10%) fee under 28 U.S.C. § 586(e)(2), which provides:

Such individual (a chapter 12 or 13 standing trustee) shall collect such percentage fee from all payments received by such individual under plans in the cases under chapter 12 or 13 of title 11 for which such individual serves as standing trustee. (emphasis added).

Debtor’s plan proposes to pay the trustee a fee equal to ten percent (10%) of payments made to creditors under the plan. The trustee contends that the fee should be equal to ten percent (10%) of payments made to the trustee under the plan.

The dispute may be illustrated by considering an example:

Assume that a plan proposes to pay the trustee $132.00 per month with $120.00 thereof being paid by the trustee to creditors. Debtor contends that the trustee’s fee would be 10% of $120.00 or $12.00. Thus, debtor submits $132.00 per month to the trustee. If the debtor pays $132.00 per month, the trustee contends that under 28 U.S.C. § 586(e)(2), it is entitled to a fee of 10% of $132.00, or $13.20 per month.

On these facts, it is clear that the trustee’s fee would be $13.20. Under 28 U.S.C. § 586(e)(2), the trustee’s fees are to be calculated as a percentage of “all payments received” by the trustee. The trustee’s fee is not a percentage of payment to creditors and claimants.

The legal issues here are confused by practical problems. Under the above example, the debtor wants to pay creditors $120.00 per month. A determination of the total amount which debtor must pay to the trustee in order to pay $120.00 per month to creditors requires solving an algebraic equation in which 28 U.S.C. § 586(e)(2) mandates that the trustee’s fee be equal to ten percent (10%) of the total payments to the trustee. Given the requirement that the trustee is paid a fee of ten percent (10%) of total payments, it follows that payments to creditors and holders of administrative claims will constitute ninety percent (90%) of debtor’s total payments under the plan. Thus, if debtor wants to pay creditors and holders of administrative claims a total of $120.00, debtor must pay the trustee $133.33 ($120.00 = 90%; $13.33 = 10%).