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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

Posted

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.

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Posted

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!

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Posted

I am a pro se Debtor,I have won Surcharges against the Trustee,I have two matters now in court: 1) Trustee did not pay off the Students loan in full, while paying all secure and un-secured loans in full, The bankruptcy court judge have RESERVED the decision on this, I am waiting after the hearing on 10/22/2012 for the decision? 2) The District Court, has my appeal to hear the RENTAL MATTER. Rents were indeed collected by the property manager hired and paid by the Trustee , but none were accounted for in trustee's Form 2.I will wait till these two matters are resolved by the court, If these matters are resolved in my favor, which it will have to be, as I am right, then I have a case against the Trustee, Do I need to file a Motion to obtain permission of the court to sue for damages against the Trustee? Does the US Trustee also is responsible for chapter 7 Trustee's damaging actions and in-actions ?

Posted

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.

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Posted

I am a pro-se Debtor , I have won penalties and interest matter , paid $98,000 to IRS, as Trustee filled 2001 IRS taxes in 2006, therefore the court Surcharged the Trustee $98,000/. and this amount was returned to me. Presently two matters are in front of court: 1) Trustee pays off all secured and Un-secured loans in full, but did not pay off the Students loan fully, the remainder of the students loan is now deducted from my Social Security Retirement Benefits each and every month. The bankruptcy court on 10/22/2012 heard the matter and OUTCOME= RESERVED, I am waiting for the decision now. 2) RENTS; Rents collected by the property manager , hired and paid by the Trustee, are not shown in Form 2, This matter is in District Court. If these two matters are decided in my favor, it will be, as I am right, then I do have a civil damages case against the Trustee. Do I need bankruptcy court's permission to sue the Trustee? should I even wait to sue or go ahead and sue now? Is US Trustee also responsible? US Trustee is responsible to oversee the assets cases? If so I will need to sue US Trustee also?

Posted

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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