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At my 341 meeting the Trustee asked how much I paid my attorney before filing and how much I still owe him. Why is that?

Taylor, MI |

Does it mean that the debt to the attorney is discharged or is the Trustee simply making sure lawyers don't charge too much? My attorney offered me a payment plan which I am still paying and that's fine. But I am very curious why the Trustee would ask that question.

Attorney Answers 3

Posted

Since I was not there, I can only speculate, so keep that in mind --

The importance of the question depends on what type of case you filed. If it is a chapter 7 then you are not supposed to be paying any fees since the fees are supposed to be paid in full before the filing.

If you filed a chapter 13 the trustee is asking so he or she can calculate how much money you have available to fund the plan to pay creditors. Paying your fee in installments is permitted in many jurisdictions.

Besides wondering under what chapter you filed your case, here's another question -- was your attorney present at the 341 meeting?

If so, why don't you ask him or her why that question was posed? It is a simple and straightforward question and nothing nefarious. If not, why wasn't he or she?

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Posted

This is a relatively new practice in the Eastern Michigan District. The attorney above is correct that Chapter 7's are supposed to be paid in full prior to filing, but many attorneys have made a practice of taking payments. Often the debtor is being garnished or in some way needs to file NOW and great harm can be caused by them having to wait until paid in full to file. After all they are not coming into file bankruptcy because they have any extra money. There are at least two cases in front of the local courts on whether or not (very simplified) attorneys for Ch 7's will be allowed to take payments or will only be able to take whatever they can get up front. The trustees are tracking this for the US Bankruptcy Trustee's Office in Detroit.

I am licensed to practice in Michigan, but this is general advice and you should consult your own attorney before taking any further actions.

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1 comment

Anthony Matthew Vassallo

Anthony Matthew Vassallo

Posted

Very interesting. Thank you for sharing your insight.

Posted

This is a standard question which is required to be answered in the bankruptcy pleadings. It is possible that this pleading didn't get filed, or that the trustee was checking to see if the amount stated in the pleading matched what you said you paid. The fees in a Chapter 7 are usually not regulated, but the fees in a Chapter 13 often are regulated. Since you didn't say what Chapter you filed, I can't speculate any further.

Hope this perspective helps!

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