Settlement Conferences Please Help

[CleanedOut]

Hi all,
My husband is having a terrible time with his Ch. 7 bankruptcy. He is being accused of preferential payments and of things like fraud. He is a very honest man, would never do anything wrong on purpose and it is just awful how this is happening. Now our lawyer yesterday had a "settlement conference" with the trustee, the US Trustee and his attorney. The result of that conference is that if my husband waives his right to discharge of his debts they will dismiss the cases, including the case they filed against his mother for a preferential payment. My husband wanted to attend this meeting but was told that he could not. My husband feels he really needs to talk to these people and that there is a big misunderstanding.

My question is how do these settlement conferences work? Could my husband attend a conference with the attorney? What if my husband dismisses his attorney and acts Pro-Se, then could he obtain this meeting?

How does a debtor get a meeting with the trustee and the US Trustee? Please help.

Cleaned Out

[AngelinaCatHub]

We were a preferential payer. Dumb as bricks and innocent as a new babe, but yet it happened anyway. I simply sold a mortgage (I didn't list, out of ignorance) got hit with a huge capital gains tax, paid back my god-daughter for loans helping us through this mess, and got caught. We had a 2004 meeting with the Trustee's attorney. Accounted for the monies, the source and the error. We did not have our attorney with us (thank God, what a help, not) and they were going to go after the god-daughter. She never knew it, and I wrote and called the Trustee lawyer and asked for six months if I could pay back the amount 5K in a lump sum. He was very nice and agreed. So, I got to pay back $5400 in above exempt properties to keep my stuff and $5000 of preferential payments. I performed this task, and was discharged after we sued our lawyer in Motion to go pro se, caused her a lost day in Court, explained publicly to the Judge of her incompetence and lack of guidance, but he said, " I wish you would reconsider this as your case is basically over, and you would cause it to last longer. You really are done with your case." Well, what could I say? Yes your honor I rescind my motion. I was finally discharged and 15 months later closed. You have to have patience at times. 'Hub

[AngelinaCatHub]

OK, I forgot to ask my question. Did your hubby pay Mom something? Feed us a little more of the back ground. As you see, of all folks we should have been dismissed, but we prevailed. You will too. What was the payment for, how much, and is that the only one? 'Hub

[CleanedOut]

It's complicated because his mother gave him money to buy a business then she took a 20% interest in the business in return. There was also an employee of the business who had a 10% interest. It was a small business selling historic artifacts. 10 months before filing bankruptcy, my husband sold the business and made a payment to his mother and to the employee. If he had waited two more months to file, this would be a non-issue. That is what kills me the most right now. We have a lawyer.

So, could/should my husband just call the trustee and or US Trustee and ask for a meeting. There are numerous errors in the documents they have filed in our case.

Thanks so much.
Cleaned Out

[AngelinaCatHub]

It's complicated because his mother gave him money to buy a business then she took a 20% interest in the business in return. There was also an employee of the business who had a 10% interest. It was a small business selling historic artifacts. 10 months before filing bankruptcy, my husband sold the business and made a payment to his mother and to the employee. If he had waited two more months to file, this would be a non-issue. That is what kills me the most right now. We have a lawyer.

So, could/should my husband just call the trustee and or US Trustee and ask for a meeting. There are numerous errors in the documents they have filed in our case.

Thanks so much.
Cleaned Out

Since you are represented, and are paying good money for this, I would light the fire under your lawyer. If this is explainable, lawyers are noted for their ability to explain. It's supposed to come with the trade. I don't believe either Trustee will talk to you directly while you are represented. Ask your lawyer for the meeting you wish, or have him request a hearing with the Judge to air this out.

It is a fact of life that sometimes the appearance of guilt, as wrong as it may be, still looks bad. There should be a paper trail to these percentages in this business.

Get a little tougher with your lawyer, perhaps he does not even understand the whole situation. 'Hub

[frogger]

There are numerous errors in the documents they have filed in our case.

I don't mean for this to sound harsh, so don't take it that way, but why are there errors in the documents that have been filed?

Did you not look at them before filing, did you provide information, did the lawyer screw up? Why?

When you filed, you signed attesting to the truth. Now you want to change the story? I would think that a trustee would frown upon that.

With that being said, good luck. I hope it goes well for you.

[CleanedOut]

What I meant was there are many errors in the documents that the Trustee and US Trustee have filed in our case.

[AngelinaCatHub]

What I meant was there are many errors in the documents that the Trustee and US Trustee have filed in our case.

I am sure these errors are due to the fact that they are not understanding all that has happened. This is why you need the paper trail as it does look like an "insider" and/or preferential payment to Mom and/or the other partner. If Mom took 20%, and the partner took 10%, that means DH owned 70%. How was the business liquidated and divided? Was this business a corporation, LLC?

If Mom was paid out of a business account, it would be much simpler than cash or personal funds. This is the muddle in the fuddle as I am seeing (guessing). 'Hub

[HHM]

Your husbands level of honesty has NOTHING to do with whether he committed BK fraud or had preferential payments. Based on what you describe, there is nothing your husband could accomplish by talking to the trustee, you are just grasping at straws because you don't like the outcome, but nothing is going to change the outcome.

I am little concerned about the waiver of discharge. That is not a good thing. The alternative is to pay the money into the bankruptcy estate or some portion of it as a settlement.

[CleanedOut]

There is a paper trail for the 20% and the 10%. It is stated on the business tax return. The business was a limited partnership. There was additional money paid to each over the amount of the 20% and the 10% in recognition of the money that they each put into the business. At this time, bankruptcy was never contemplated by my husband and he was trying to make his partners even. The amounts over 20% and 10% are what could be considered preferential, I imagine, however my husband was not insolvent at the time we don't believe. However, the trustee has sued both to recover the entire payments with no recognition of percentage interests. This is such a nightmare.

HHM, how would it be that nothing can be changed now because this was an offer of a settlement, to waive his right to discharge of all his debts and in exchange all the cases would be dismissed. I do not know how settlement conferences work and if there can be counter offers or if there is a period of negotiation. I cannot imagine my husband waiving his right to discharge because even if the payments were partially preferential, he never hid the payments, he disclosed them honestly as he was not aware there was anything wrong with them. They seem to think he has committed fraud, we don't know particularly how they think he did commit that fraud. The complaint objecting to discharge states he failed to disclose assets and income, which he did not do, and that his schedules fail to reflect a transfer to an insider within on year of filing. On the Statement of Financial Affairs, the payments are disclosed.

[CleanedOut]

P.S. At the settlement conference yesterday, the trustee and the US Trustee said there was no option to pay money into the estate as a settlement. The waiver of right to discharge was the only option presented.

[HHM]

Your alternative is to go to hearing before the judge. If the trustee is not budging, you might as well go to court and have the judge decide. At least there, the issue of intent can help mitigate your circumstances and the judge may not go as far as denying discharge. At this point, you are no worse off by going to court since the current settlement offer is so bad.

You better get some money together because this will likely cost you. But, if the alternative is coming up with an additional $5,000 to have a hearing, or waiving right to discharge (which means that none of the debts that were included in this BK can be discharged in a future BK), go to the hearing.

The issue of preference and the issue of fraud are separate. You can usually settle the preference issues with money, but the underlying non-disclosure and bad faith issues generally cannot be "settled" since the US trustee is not about getting more money for creditors. .

You mention other cases, just how many issues are there in this case.

[CleanedOut]

There are 4 cases, the Chapter 7, and 3 APs, one against my husband, one against his mother and one against his business partner. There are issues of preferential payment against his mother and business parner. And fraud alleged against him in addition to preferential payment.

[MakinMeCrazy]

Hi...
If I am reading this and understanding this correctly, because you filed 10 months after these prefrencial payments instead of waiting 2 more months (1 year) everything would have been ok? Why didn't your attorney mention this? It seems so unfair since obviously your husband did this wiht good intentions

[music12]

I don't know why you weren't allowed in the settlement conference. it was your right. anyway, sounds like your lawyer is totally incompetent. i don't know what to suggest. but waiving your right to ever have these debts discharged is a really bad deal. maybe talk to some other lawyers and see what they say. this one is doing you no good.