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Can a trustee for a Chapter 7 filing hire her own law firm to investigate the filer documents?

Scottsdale, AZ |

It seems like a conflict of interest. They pressure the filer to make some settlement and then take a % which the trustee gets in addition to their fees

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Attorney answers 5

Posted

Normally, the Trustee will get court approval to retain counsel to represent him. Often, it can be his own firm.
Remember, the Trustee is a separate entity.
The Trustee is hiring an attorney for assistance to help the bankruptcy estate maximize recovery to pay creditors.
The Trustee's fees belong to him and not to his law firm.

Posted

Yes. They can do this and it happens regularly. All with court approval. There is nothing, strictly speaking, unethical about it as they are doing it to obtain as much money as possible for the creditors in the case. The fact that the trustee benefits in some small way is just a bonus. If you want to get mad, then consider that many times the attorney fees for the law firm hired by the trustee seem to add up to the amount recovered, leaving nothing for the creditors. This also happens regularly.

Douglas Edmunds is in the business of helping people and companies file for bankruptcy protection. The bankruptcy code requires that I call my firm a "debt relief agency." Any answers or information provided is for general information purposes only and is not intended to be a legal opinion, legal advice or a complete discussion of the legal issues. This is not intended to create a attorney-client relationship. Each individual's situation is different and you should seek independent legal advice from an attorney familiar with the laws of your state for specific information.

Posted

Yes, they can IF the bankruptcy court approves the fees. You filed on your own, didn't you? I suggest you take all your documents to a bankruptcy attorney for a consultation. Good luck.

Be sure to designate "best answer." If you live in Oregon, you may call me for more detailed advice, 503-650-9662. Please be aware that each answer on this website is based upon the facts, or lack thereof, provided in the question. To be sure you get complete and comprehensive answers, based upon the totality of your situation, contact a local attorney who specializes in the area of law that involves your legal problem. Diane L. Gruber has been practicing law in Oregon for 26 years, specializing in family law, bankruptcy, estate planning and probate. Note: Diane L. Gruber does not represent you until a written fee agreement has been signed by you and Diane L. Gruber, and the fee listed in the agreement has been paid.

Posted

Yes, with a judge's approval, a chapter 7 Trustee can hire her own law firm to investigate the Debtor's documents.

The information contained in my answer is provided for informational purposes only, and should not be construed as legal advice.

Posted

Yes the trustee can but if you think their is something improper, have your lawyer present tha to the judge

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