The trustee’s compensation (chapter 7 & 11) is determined to be 25% of the first $5,000, 10% from $5,000 – $50,000, 5% from $50,000 – $1,000,000 and 3% of any turned over monies in a bankruptcy case, under 11 USC 326(a). Consequently, the trustees collect all of the debtor’s property with zest. In bankruptcy, the debtor lists all the property he or she claims to be exempt. The trustee must then object (with measurable facts) to these claims within 30 days, otherwise, the claims stand. Usually, the trustee states his disagreement with the assigned value of the debtor’s property. The debtor must then either modify the list of exempt property or argue the trustee’s evidence in a court hearing.
A property appraisal is the most common kind of evidence in such cases. The appraiser, hired by the trustee, must declare that he is not biased, holds no interest in the property of the debtor and has made a fair appraisal. The appraisal is presumed to be valid evidence if it is done by a qualified appraiser. The appraiser’s value will be valid unless the debtor refutes them with their own proof. Thus, the debtor might need to hire their own appraiser, at an unaffordable cost of $300-$500, due to bankruptcy.
Appraisers are actually disguised as auctioneers. They are encouraged to falsely increase the values of the appraised property so that they are hired by the trustee to auction the estate. Thus, they get the appraisal fee and their commission on auctioned goods. Such appraisers are hired by unethical trustees in order to obtain more estate property to increase the money in their wallets.
Usually, the trustee offers a buyback to the debtors, which allows them to buy their un-exempt property from the estate with the payment plan of over a year long. The debtors, often, agree to such an offer. In such a case, the selling of goods by the appraiser does not take place, but they are still paid the appraisal fee.
To overcome this situation, the debtors must either hire their own appraiser for $300-$500 or attempt a motion for the removal of the trustee from the case. Under 11 USC 324(a), the court is permitted to do so “for a cause”. Such motions are very serious and difficult, as it involves the trustee’s removal from all the cases unless the entering of special order and also due to its extreme effects. A counsel can be hired by the trustee for defending, whose payment can be done from the estate’s assets. If the trustee proves the suit baseless and wins the case, they can sue the filer of the motion for sanctions.
It is always better for an individual debtor to pay off the unethical trustee, which is often cheaper than an appraiser’s and the hearing attorney’s fees combined.
It is better to consult an experienced bankruptcy attorney in case of the apparent ludicrous appraisal. Contact the Recovery Law Group at www.recoverylawgroup.com or call on 888-297-6203.