Limit on Chapter 13 Trustee’s Fees

An attorney on the CDCBAA forums asked the following question, I was asked to post my answer for all to see:

The CD chapter 13 plan estimates Chapter 13 Trustee’s Fee at 11% “unless advised otherwise.” However, Section 326(b) appears to limit the chapter 13 trustee’s fee to no greater than 5% of all payment under the plan. I’ve always figured the 11% was just to keep the bases covered with a built in cushion.

I recently filed a MoMod to a 100% plan where the trustee’s fees were estimated at 3.33% (they had been 3.31% so far in the case) and the trustee issued comments requesting an increase to 10% of the final payment, or 8.6% of all payments made under the plan. There were no extraordinary services provided by the trustee (not to see her trustee work was not stellar), so can anyone tell me if there are times when the trustee fee can exceed 5%? What am I missing?

Section 326(b) governs payment of Chapter 13 Trustees. It says that if there is a standing trustee, that trustee is compensated per 28 USC 586(b) and cannot be otherwise compensated by the Estate. Now, if there is no standing trustee, then the chapter 13 trustee is subject to reasonableness standards of section 330 but limited to 5% of all payments under the plan.

586(e) is where the 10% fee comes from and only applies to standing Trustees.