Funds taken from bank account...

[brokeburt]

So we run a small business and filed for a Chapter 13 last month. Literally 3 days before we got our case number Bank of America removed everything from our personal and business accounts to cover a small business loan. We had notified them of our intention to file a few months before, and they simply said to give them the case number when we received it. We had only missed four payments before the money was taken. Our BK attorney is now filing a motion to have the money returned via a trustee. He's charging us an extra $1500 to do this (which we obviously don't have.) We have a few questions that hopefully someone here can help out with...
Has anyone else been in this same situation?
Is it likely the money will be returned?
Does it go to a trustee or directly back to the bank account under the wild card rule (the CA wildcard is about $20,000 which was roughly the amount taken)?
Is there a way to avoid the attorney fees and file the motion ourselves?

Our attorney is kind of hard to communicate with and hasn't instilled in us much confidence, so any advice or knowledge anyone has would be very much appreciated... thanks in advance!

[brokeburt]

Anyone...? Just wanted to make sure everything's kosher before we proceed... thanks!

[rrockinggramma]

the attorney should handle everything. The trustee will make B of A give the money back and it will go into your trustee account to be paid towards creditors. B of A will have to file a claim to get paid.

Now the fact that you actually hadn't filed yet might make a difference but that amount would make the trustee go after them because it is a preferential payment to a creditor.

[AngelinaCatHub]

If you had not filed yet, and they took your money, on what legal cause were they able to do this? Read all your paperwork. Missing those four months could have triggered a call on your loan. You may not have recourse. The good side, you won't have them to pay in your 13 and your payment would be lower. Try for a 7 conversion if you can qualify. 'Hub

[falken]

I would not pay the attorney the $1500.

Chances are they had some legal standing to take the money from your account, based on some agreement you signed with the account or the loan.

Since you had not filed yet, nothing was preventing them from doing so.

I would simply inform the trustee at your 341 when they ask if all the information in your petition is accurate. Unless you listed this payment, its not, I realize you didn't intend to make the payment but it was still made.

The trustee will seek return of the money which will lower your plan payment if you are in a 100% payback, if you are not it probably will not affect you.

Either way, you have little chance of ever directly seeing that money agian no matter what course of action you take (unless you are sure they had no authority to remove the money based upon your default).

[brokeburt]

Thanks for the responses everyone! Our attorney seems to think that the whole amount will be returned directly to us (or at least most of it - since it falls within the wild card amount, and is needed to keep the business sustained). If we don't receive the money directly it will be impossible to maintain the business - we'd like to which is why we filed 13.

I would not pay the attorney the $1500. Chances are they had some legal standing to take the money from your account, based on some agreement you signed with the account or the loan.

We met up with the attorney this morning and he told us the $1500 would just be added to the monthly amount given to the trustee which would be okay I think.

So, everyone seems to agree that it's pretty implausible the money will be returned directly? Or does the wildcard amount (the business is valued at about $8000 which leaves about $12000 according the CA wildcard) affect that? Or is the wildcard irrelevent since this happened before filing? Our attorney seemed pretty assured that the money would be directly returned since it's needed to sustain the business (it would be treated as "tools of the trade"?). Thanks again, guys - it's great to get another viewpoint!

[rrockinggramma]

your attorney sounds like he knows his stuff. Follow his advice. You will probably get back the exempted amount at the very least. GL

[nodollarsnomo]

Just Curious

Was your personal and business accts. with Bank of America?

[brokeburt]

your attorney sounds like he knows his stuff. Follow his advice. You will probably get back the exempted amount at the very least. GL

Good to hear - thanks!

Was your personal and business accts. with Bank of America?

Yep

[MSbklawyer]