11 USC 326: Trustee Compensation Caps by Bankruptcy Chapter

Under 11 U.S.C. 326, trustee compensation is capped on a sliding percentage scale in Chapter 7 and most Chapter 11 cases, at five percent of plan payments in Chapter 12, Chapter 13, and subchapter V cases, and at a flat statutory fee in no-asset Chapter 7 matters. The number Section 326 produces is a ceiling. The court still has to approve the actual fee as reasonable under Section 330, and it can award less.

The Sliding Scale for Chapter 7 and Chapter 11

For trustees in Chapter 7 liquidations and standard Chapter 11 reorganizations, the maximum fee is calculated in tiers against every dollar the trustee pays out:

Up to 25 percent on the first $5,000 or less
Up to 10 percent on any amount over $5,000 through $50,000
Up to 5 percent on any amount over $50,000 through $1,000,000
Reasonable compensation not to exceed 3 percent on amounts over $1,000,000

Each rate applies only to the dollars inside its tier. A trustee who disburses $100,000, for example, has a maximum fee of $1,250 (25% of the first $5,000), plus $4,500 (10% of the next $45,000), plus $2,500 (5% of the next $50,000), for a combined ceiling of $8,250.¹

Cases filed under subchapter V of Chapter 11 are excluded from this sliding scale and fall under the plan-payment rule described below.

What Counts as Moneys Disbursed

The calculation base is every dollar the trustee actually pays out to parties in interest. That phrase covers unsecured creditors, administrative claimants, and secured creditors. If the trustee sells estate property and pays a mortgage lender or other lienholder from the proceeds, the full amount paid to that lienholder counts toward the fee calculation.

Two things are excluded. Money or property turned over directly to the debtor is not part of the base. Neither is property the trustee abandons or returns to a secured creditor without disbursing funds. If the trustee never handled the money, it does not inflate the ceiling.¹

The Five Percent Cap in Chapter 12, Chapter 13, and Subchapter V

Repayment-plan cases work on a flat percentage rather than a sliding scale. Trustees in Chapter 12 family farmer or fisherman cases, Chapter 13 wage earner cases, and subchapter V small business reorganizations cannot receive more than five percent of all payments made under the confirmed plan.²

The statute also bars the court from awarding compensation under Section 326 to the United States Trustee or to a standing trustee appointed under 28 U.S.C. 586(b). The five percent cap applies specifically to a trustee appointed under Chapter 12 or Chapter 13.²

The Flat Fee in No-Asset Chapter 7 Cases

Most Chapter 7 cases are no-asset cases. There is nothing to liquidate, no funds are disbursed, and the sliding scale produces zero. A separate flat fee in 11 U.S.C. 330(b) fills that gap.

The Bankruptcy Administration Improvement Act of 2025, signed into law on February 6, 2026, raises that flat fee from $60 to $120 per case. The statute does this by increasing the base amount in Section 330(b) from $45 to $105, which combines with a separate $15 component for the $120 total. The higher fee applies to Chapter 7 cases commenced on or after October 1, 2026, and to cases converted to Chapter 7 on or after that date. Cases filed before October 1, 2026 remain at the prior $60.³

The Cap Is a Ceiling, Not a Guarantee

Section 326 tells you the most a trustee can receive. It does not tell you what the trustee will receive. Before any fee is paid, the court must approve it as reasonable under 11 U.S.C. 330, considering:

Time the trustee actually spent on the case
Billing rates against the market
Whether the services were necessary and produced value for the estate
Whether the work was completed in a reasonable timeframe given complexity
What comparably skilled practitioners charge in non-bankruptcy matters

Courts will cut fees below the Section 326 maximum when the work does not justify the full amount. A trustee who collects a large insurance payout with minimal effort, for example, can see the fee trimmed well below the statutory ceiling because the recovery did not require proportionate work.⁴

Expenses Are Reimbursed Separately

The Section 326 percentages apply only to compensation for services. Actual, necessary expenses the trustee incurs while administering the case are reimbursed separately under Section 330(a)(1)(B). Costs like travel, mailing, and storage do not come out of the fee cap. They still require court approval, and the court will look at whether each expense was both actual and necessary.⁵

Multiple Trustees Share One Cap

When a trustee is replaced or more than one person serves as trustee at different points in a case, Section 326(c) provides that the combined compensation of all trustees cannot exceed what a single trustee would have earned. The ceiling does not reset. If the first trustee received $3,000 of an $8,250 maximum, the successor is limited to the remaining $5,250.⁶

When the Court Can Deny Compensation Entirely

Section 326(d) allows the court to deny trustee compensation altogether in conflict-of-interest situations. A trustee who failed to investigate facts that would have revealed a disqualifying conflict, or who knowingly employed a professional who was not disinterested or held an adverse interest, can lose the fee completely. The provision cross-references Section 328(c) on disqualification of professionals and puts the financial consequences of a bad hire on the trustee personally.⁶

Getting Paid Before the Case Ends

Cases can run for years. Section 331 lets a trustee apply for interim compensation once every 120 days after the order for relief, and the court can permit more frequent applications in large or complex cases. Interim requests still require notice, a hearing, and the same reasonableness review as a final application. Anything paid on an interim basis counts toward the Section 326 ceiling, and if the court later finds the interim total was more than reasonable, the trustee may have to return the excess.⁷

1
Office of the Law Revision Counsel. 11 U.S. Code 326 – Limitation on Compensation of Trustee
2
Office of the Law Revision Counsel. 11 USC 326 – Limitation on Compensation of Trustee
3
Congress.gov. Bankruptcy Administration Improvement Act of 2025 – Public Law 119-76
4
Office of the Law Revision Counsel. 11 USC 330 – Compensation of Officers
5
Office of the Law Revision Counsel. 11 U.S. Code 330 – Compensation of Officers
6
GovInfo. 11 USC 326 – Limitation on Compensation of Trustee
7
Office of the Law Revision Counsel. 11 U.S. Code 331 – Interim Compensation