Help! It's only been 1 day since I've filed and attorney already says I've messed up

[jjsmith]

We have a business that has 4 rentals, all of which will be surrendered in the BK. It wasn't until the last minute that we decided to surrender these properties. We knew that by surrendering them, the tenants would get evicted when the bank forecloses. So we informed all the tenants and told them we would refund their security deposits immediately. The deposits is the only money that the business has at this point. We mailed the deposits and then I just thought I'd double check with the attorney. He said I should not have given the tenants back the deposits and that the trustee will be mad about me doing that. Great!! I've already got something to make the trustee mad about!! I was just trying to be as honest as I could with tenants and not take advantage of them, like so many people are doing these days.

I'm a little frustrated because I feel like if there's something I shouldn't do, my attorney should tell me before hand. We've tried to tell him as much as we can.

These deposits were held in a business account and are property of the business, not me. The business isn't filing bankruptcy, I am. I know everything is intermingled in a way, but I looked at the deposits as debts to the business that needed to be paid and so I paid them. Is he correct, is there going to be a problem?

[ForumReader]

We have a business that has 4 rentals, all of which will be surrendered in the BK. It wasn't until the last minute that we decided to surrender these properties. We knew that by surrendering them, the tenants would get evicted when the bank forecloses. So we informed all the tenants and told them we would refund their security deposits immediately. The deposits is the only money that the business has at this point. We mailed the deposits and then I just thought I'd double check with the attorney. He said I should not have given the tenants back the deposits and that the trustee will be mad about me doing that. Great!! I've already got something to make the trustee mad about!! I was just trying to be as honest as I could with tenants and not take advantage of them, like so many people are doing these days.

I'm a little frustrated because I feel like if there's something I shouldn't do, my attorney should tell me before hand. We've tried to tell him as much as we can.

These deposits were held in a business account and are property of the business, not me. The business isn't filing bankruptcy, I am. I know everything is intermingled in a way, but I looked at the deposits as debts to the business that needed to be paid and so I paid them. Is he correct, is there going to be a problem?

I am a renter and have informed my landlord (a private landlord) of my BK from before. He appreciated me being upfront and said he would do the same for me if he ever came to that position. I think it was the right thing for you to return these security deposits back to these renters as it was their money to begin with. From what I understand, it is a sticky situation when it comes to rental income, security deposits, etc and tenants/landlords being involved in BK. It also depends on your trustee who will oversee your case. Hope everything works out.

[jjsmith]

I guess I should restate something, these deposits really aren't property of the business at all! They are held in trust and are property of the tenants. All I know is that I don't $4,000 to give the court if they're unhappy about these payments. Frankly my attorney should have told me to refund the deposits prior to filing. I'm nervous about what else he's missed.

[jjsmith]

Well, I can sigh a bit of relief. When my attorney found out who our trustee is today, he said we would have to worry. He said our trustee is really mellow and doesn't make a big deal of things. I'm soooo glad. We really need a nice trustee.