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Can I sue US Trustee and Chapter 7 trustee both. ? 7 Trustee for Misappropriation , and Us Trustee for Non performance?

Bridgewater, NJ |

Chapter 7 trustee have been found guilty of misappropriation of funds and have been Surcharged by the court. Can I sue for damages , while other Motions are going on? Do i need to get permission of the Bankruptcy Court to sue chapter 7 Trustee? If I need permission , how do I need to get it? By filling a Motion?
US Trustee is incharge of safeguarding the assets cases in chapter 7 and are responsible to protect the Debtor? When misappropriation of funds took place, US Trustee must have stopped chapter 7 Trustee? US Trustee fails to do his duties? Can I also sue US Trustee? and do In need bankruptcy court's permission to sue US Trustee?

Attorney Answers 4

  1. You need to speak to a bankruptcy litigator. I'm not really sure what your damages would be if the trustee misappropriated funds that comprised bankruptcy estate assets. Unless the trustee took otherwise exempt assets from the debtor it seems that the creditors may have been hurt, and the integrity of the US Trustee but I don't see the harm to the debtor. And as an aside, it is NOT the US Trustee's duty to look out for the debtor - their role is to oversee the administration of cases, review for compliance with the code, look put for the interests of the unsecured creditors, and to refer cases for prosecution of bankruptcy fraud where appropriate.

  2. Are you a creditor who was harmed by this? Or are you a debtor who filed bankruptcy and whose property was taken? A creditor has standing to file suit because money that should have been paid was not received. A debtor in bankruptcy is unlikely to have sustained financial harm because regardless of the trustee misconduct, s/he was not entitled to retain the property held by the bankruptcy estate.

    Hope this perspective helps!

  3. You do need court permission to sue the Trustee. Very unlikely you could have a suit against the UST. Who are you (what is your status in the case) and how were you harmed? If you are the Debtor it is unlikely that you have any suit unless the Trustee took money that was supposed to be returned to you.

    You do not want to anaalyze this situation or attempt a suit without an attorney.

    Disclaimer: This answer does not constitute legal advice. I am admitted in the States of New York, New Jersey and Massachusetts only and make no attempt to opine on matters of law that are not relevant to those three States. This advice is based on general principles of law that may or may not relate to your specific situation. Facts and laws change and these possible changes will affect the advice provided here. Consult an attorney in your locale before you act on any of this advice. You should not rely on this advice alone and nothing in these communications creates an attorney client relationship.

  4. First and foremost, to answer your quesiton about whether you have th eright to sue the US Trustee adn/or the Chapter 7 trustee for misapproporation damages, or on some other theory perhaps, the answer is YES. You do nto need anyone's permission to bring a Motion or an appropritate complaint, as long as it has merit. Your quesitons lead to a lot of follow up quesitons which you would really be best served by speaking with an attorney about. You are certainly entitled to represnt yourself if you choose to do that, but I thunk you would be best served retaining counsel in this case.

    Good luck!

    Karina Lucid, Esq.
    3640 Valley Road, Suite 2A
    Liberty Corner, NJ 07938
    (908) 350-7505

    This answer is offered as a public service for general information only and may not be relied upon as legal advice. No attorney-client relationship is created or is intended to be created hereby.

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