The trustee hired an attorney......?

[pd1373]

Hi all
My Ch7 case was discharged over a year ago, and since then life has proceeded as close to normally as one might reasonably expect under the circumstances. Anyway, the case was never closed due to a $4000 preference to one of the creditors that the trustee decided to reclaim. Apparently the creditor must have been ignoring the request to repay the estate. Just for S&G I checked PACER today, and noticed that on 6/12 some motions were filed in my case. The trustee is retaining an attorney, who is apparently tasked with retrieving these funds and will get a 25% commission if he succeeds. At least, that's how I understand it.

So, the questions. How often does this happen, and what's likely to happen next in my case? I know none of this actually involves me, but the curiosity is killing me...

Thanks!

[music12]

that creditor will probably end up in a lot of trouble. my guess is he will have to pay sanctions in addition to the $4000. the creditor is supposed to cooperate with the trustee, but this one probably hoped the trustee would go away because it's not worth it to go after $4000. the creditor hoped wrong!

it's unusual, so you will probably have to be the one to satisfy everybody else's curiosity!

[pd1373]

The story's not over, but close enough to be told now.

Apparently what happened is actually fairly standard procedure in cases like this. Legal work was continuing in a desultory fashion until about a month or so ago. The trustee was preparing to sue the creditor for the money, and a court date had been set (which would actually have been later today.) However, as is also typical in civil cases the creditor's attorney and the trustee's attorney were communicating behind the scenes, and had actually worked out a settlement.

But then something else happened. The creditor itself (it's a construction firm) is insolvent. They backed out of the settlement (actually, they went and hid from their attorney, who was therefore forced to request termination of his services for the creditor, so the settlement offer was withdrawn.) So now summary judgment for the total plus interest and expenses has been requested by the trustee and will almost certainly be granted within a few days. The creditor's attorney has informed the court that his client has ceased business operations, one of the business partners has already filed chapter 7 personally, and both the business and its other partner will be filing chapter 7 very soon. One might reasonably conclude that that will happen as soon as they scrape together enough money to pay their bankruptcy attorney, by which time the judgment will almost certainly have been filed. I imagine this judgment will be wiped out in bankruptcy court, and that will be the end of that.

When I filed over two years ago I owed this creditor over nine thousand dollars out of my $81,000 filing, not counting the $4000 preferential payment that the trustee intended to claw back. Turns out this was only a drop in the bucket for this creditor; according to the personal filing already done, the business has over a quarter million dollars in uncollectible receivables, $1.5 million in liabilities, and no equity in any of its business property or equipment.

I got my discharge 22 months ago, but my case is still open because of this and I don't know when it will finally close. But my credit score is back over 700, I have a good relationship with the credit union that held the note on my car through the bankruptcy and was there for me with little short-term loans sometimes in the first months after the bankruptcy when the checkbook got low and nobody else would help out. Now I have positive cash flow. I have two small credit cards that get paid off regularly. It's much better now. It's not always easy going, but it's a damn sight better than it was before chapter 7. My relationship with money hasn't been this good in over a decade. I don't know what the future holds for my erstwhile creditor, but I wish them luck.

And that's the way it is.

Cheers and regards,
pd1373

[music12]

fascinating! i guess it's a sign of the times that both debtor and creditor are simultaneously insolvent...

[AngelinaCatHub]

I had a similar situation as in preferential payments. I paid my god-daughter and son-in-law money that they loaned me before bk. I knew no better. Trustee hired an attorney, and I had a 2004 meeting to explain the situation. Within a bit if time, It was ordered that they retrieve the money I paid to them. I wrote a personal letter to the Trustees attorney with copy to the Trustee to allow my six months to pay the full amount back to the estate (Trustee) rather than take the money from my kids. They accepted. I was discharged but not closed until all the money was paid back and then months later, I was closed after disbursement. Both the Trustee and attorney got about $1700 and IRS got the residual as I also bought back some non-exempt property. So all worked out satisfactory as IRS got a chunk but I still owe them 17K of 27K at this time. They are accepting a payment plan.

We too have realized our values and live a much more stress free life not taking loans from other people or places. If you do not have the money, we don't need the stuff. We wait and that is worth the lack of stress of indenturing ourselves to another person. 'Hub