Windfall question

[isach7]

Hi,

I have read a few posts on receiving windfalls but none have matched my situation so am seeking your advice.

A couple of years ago I started a sexual harrassment lawsuit against my former employer and was seeking damages. As a result of the fallout of this I eventually lost my house and ended up filing for Ch7 bankruptcy which I did in May 2010. Prior to filing, my harrassment case was rejected by the judge and my lawyer launched an appeal. While in the appeals process I filed for Ch7 and was advised by my lawyer to not mention the lawsuit in the Ch7 filing since it was technically no longer 'active' since it was in the appeals process. Not to mention that I was not 'expecting' a windfall since the judge rejected the case.

I received my Ch7 discharge today

I subsquently heard from my lawyer that the lawsuit appeal failed and that if the case is to continue it has to go into arbitration. Opposing counsel have now approached my laywer to discuss a potential settlement to avoid a costly and time consuming abitration process. I have agreed that I would be interested in taking such a settlement. Note that the proposed settlement would still be far less than what I owed in my bankruptcy.

I understand that windfalls received within 6 months from the filing date can be subject to the trustee taking those proceeds to pay off my debtors. What should I now do? I have told my laywer about the windfall penalty and that we should tread carefully. Should I ask my lawyer to defer the actual settlement of the case for 4 more months (until the 6 months expires from date of filing) ? Could I ask for any damages to be awarded to someone else (fiancee?) ? Could just the actual payment to me be deferred for 4 months? It just wouldn't be fair to have been forced to file for bankrupcy due to losing my job and house because of the harrassment and then after winning the related lawsuit have to pay back the debtors and end up with nothing!

Any advice appreciated!

[booboo]

I gotta tell you that the appeal should have been disclosed in your filing. You need to disclose this to the Trustee. If you are caught, you will have your BK recinded by the Trustee. I do not know if you will have to face any penalty or not.

Also, I think that a certain part of your settlement you can keep, but what surprises me, is the the other party is not aware of your BK and not using it against you. What I mean is any good attorney should have looked at all the public records on you and used this as a weakness for your case and used it against you.

Good Luck...

BooBoo

[newbie2]

Hi,


I understand that windfalls received within 6 months from the filing date can be subject to the trustee taking those proceeds to pay off my debtors. What should I now do? I have told my laywer about the windfall penalty and that we should tread carefully. Should I ask my lawyer to defer the actual settlement of the case for 4 more months (until the 6 months expires from date of filing) ? Could I ask for any damages to be awarded to someone else (fiancee?) ? Could just the actual payment to me be deferred for 4 months? It just wouldn't be fair to have been forced to file for bankrupcy due to losing my job and house because of the harrassment and then after winning the related lawsuit have to pay back the debtors and end up with nothing!

Any advice appreciated!

I don't know which attorney advised you to not mention this in your bankruptcy petition, but it really should have been. Even though the first case was denied, it was appealed and therefore there was a court record of it when you filed.

Call your bankruptcy attorney and fill him in on this latest development. You're probably worrying for nothing. Even if you do receive an award I'm sure the attorney representing you is going to get a nice chunk of it, and your may be able to exempt the rest or a portion of the rest.

[Flamingo]

If you do not disclose this information and it is found out you can be charged with fraud and the entire matter reopened and reviewed. The key is you knew of this suit when you filed even though you did not have an outcome. It's obvious you know that stating that you had no knowledge of any lawsuits at the time of your filing could get you in trouble. I don't know what lawyers you have involved in this and if they are interacting due to your situation but your if your chapter 7 lawyer told you your case was not active since it was in the appeals process, he needs to go back to law school. You need to ensure this is all disclosed to the trustee of your Chapter 7.