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

Asked about 1 year ago - 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

Attorney answers (5)

  1. Douglas Garth Edmunds

    Contributor Level 13

    4

    Lawyers agree

    Answered . 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... more
  2. Andrew M Ellis

    Contributor Level 13

    2

    Lawyers agree

    Answered . 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... more
  3. Steven W Zachary

    Contributor Level 17

    1

    Lawyer agrees

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

  4. Diane L Gruber

    Pro

    Contributor Level 18

    2

    Lawyers agree

    Answered . 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.... more
  5. Ray Choudhry

    Contributor Level 14

    1

    Lawyer agrees

    Answered . 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.

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