What does this mean? Trustee's Application to Employ Attorney?

[heather307]

We filed 9/21, well under the median income. Our 341 was 10/29 and today we received a Trustee's Application to Employee Attorney. They want to examine the real estate records and tax records to determine what property constitutes part of the bankruptcy estate and examine the debtor's books and records to investigate and recent payments and transfers of property made by debtor. Are they just asking for more information or is this a formal audit? It's after hours so I can't call the attorney. I'm nervous.

[freshstart06]

From what I learned from reading other people's cases on pacer, the trustee is getting an attorney to assist him with your case. I don't want to scare you but be prepared to fight, they are investigating your case further, they either found something or think they found something in question with your case. Just give them whatever they need.

[HHM]

Why don't you fill us in on the background of you case and we can give you a more informed opinion. In any event...having the trustee hire an attorney is a BAD SIGN. This is NOT an audit. The trustee thinks you are hiding something or otherwise have illegitimate transfers of property and is going to the effort to figure that out.

[JollyGG]

We had a similar notice. All it was in our case was the local trustee asking the U.S. trustee to hire her firm to collect and distribut assets in our case.

It seemed strange but I guess it is how it works.

[freshstart06]

jolly for what I found on pacer is that it could be simple as your case or worse but either way they are hiring an attorney to look further into the case.

[heather307]

Thanks for the info so far. Long story made short. . . my dad loaned us the money for the down payment on our house. He has the 2nd deed of trust on our home. In addition, he purchased bought my husband a car--their is a lien and promissory note for the purchase amount. During our 341 the trustee told our attorney he would need to see a copy of the title on the car before determining a no asset case. I am hoping this is just a formality while so he can verify the DOT and the lien on the vehicle.

[heather307]

Update . . .

Did any of this info help?

[HHM]

When did all these transactions take place with your dad?

[heather307]

The DOT, the same day we bought the house. The lien, the same day the car was purchased.

[HHM]

The DOT, the same day we bought the house. The lien, the same day the car was purchased.

Funny...

I mean, when, relative to when you filed BK, did these transactions take place.

[SinkingFast]

Amislander went thru something similar to this on her 4 Runner.

Amislander bought a 4 Runner, financed my her Mother. Mom was put on the Title as the Lien Holder of Record when the vehicle was purchased and the Title was registered.

10 months later, Amislander filed Ch 7 BK. Later, the Trustee questioned the validity of the Title. Mom is an Insider. The transaction took place within a year of filing. It looked, to the Trustee, like this was a Preferential Transfer of an Asset.

That's probably what's going on with your case. Your Dad holds a 2nd on your house and the Lien on your car. Were the house and car bought within a year or 2 prior to your filing BK??

About the attny,............ Trustees are entitled to retain legal representation too. Generally, they hire their own Law Firm, to represent them. Sometimes, they represent themselves. Sometimes a Partner represents them.

Yes, it's double dipping. And, Yes, it's allowed.

[freshstart06]

I am surprised you attorney did not see this as a red flag!? Maybe he will have some answers for you on Monday but until then don't worry, there is nothing you can do today or tomorrow. Rest and stay positive. if it turns ugly remember do not give up.

[heather307]

We never outrigt owned the vehicle. . .

I'm not worried about the DOT on the house. It was done exactly as if we had taken a 2nd from a bank. Our attorney did look at all the paperwork and said the Deed was valid.

I looked back at Aimslander's post. . . it appears her problem occurred because the vehicle was worth $10K and the lien was for $7K. With Florida's $1K exemption, she had equity. In addition, it doesn't appear that her mother loaned her the money to purchase the vehicle but rather to help her with some other financial problems. My dad bought the car, this can be verified with the dealership and his bank records. We have a lien for $17K, the purchase price and the vehicle is now worth about $13K. Am I reading Aimslander's post correctly?

[HHM]

Heather, instead of dancing around the bush, why don't you simply give us the facts. Until you do so, no on can really say what happened. You have been very wish-washy on the facts, and even when directly asked for certain important information, you are not providing it?

For the CAR
When did this take place.
You say your Dad bought the car from the dealership...(meaning, the sales K was in his name, correct?). Did he pay cash or finance it.
When did he turn over title
I assume he put himself as the lien holder, correct?

For the HOUSE
When did the transaction take place.
You say the money loaned was for a down payment, correct?
What percent was the Down payment relative to the purchase price.
When was the 2nd deed of trust taken?

Based on the scant facts you have provided, it sounds like the Car deal is the suspect transaction. If in fact your dad bought the car directly from the dealership, and then simply signed over the deed to you while maintaining a lien...to the trustee, that looks like a sham gift. I hope you have been making payments to your Dad on the car, but even then, based on the information provided so far, the car deal appears to be the problematic transaction.

[freshstart06]

This case may crash, contact your attorney asap and be upfront and honest or you can face getting dimissed. Any good attorney would have caught this right away unless he was not informed of all the facts, something is not adding up..