Not attend 341, trustee sold properties? Did trustee broke any laws? Is this Mistrial? Is trustee required to inform court ?

Asked over 1 year ago - Bridgewater, NJ

High assets case,Court orders chapter 13 to be converted to chapter 7. I objected, was never a chapter 7 candidate, Trustee was appointed, I, hired a new attorney to get me back to chapter 13 or 11.
I, Debtor,was never informed of 341 meeting, I did not attend,. Trustee proceeded by selling properties, all monies were distributed , everyone got 100% except me, ZERO, Trustee pays himself, in way of Management , attorney and trustee fee over 60% of the estate ( about one million), Trustee went ahead not letting the court or the US trustee know that the Debtor did not attend 341 meeting , for his own benefits.Trustee should have informed the court of my non-attendance of 341 meeting, Is this a Mis-trial,? What laws was broken by the Trustee?, I am devastated, I got ZERO.

Attorney answers (4)

  1. Wendy Erin Morris

    Contributor Level 10

    4

    Lawyers agree

    Answered . The trustee has the authority and a fiduciary duty to sell any and all non-exempt assets. The trustee does not need to inform the court that you did not attend a schedule 341 meeting, per se. Whether or not you participate in your case, the trustee is required to sell any and all non-exempt assets and distribute the proceeds to claimants according to their priority (including expenses associated with the trustee selling the assets). Typically, a debtor is not entitled to a distribution from the estate--absent a surplus after all allowed expenses and proofs of claims have been paid.

    When you mention that you were never informed of the (new) 341 meeting in the converted case, you should check with the Clerk's office to find where notices related to your bankruptcy case are being sent. Also, where was the new attorney? The events you mention usually happen over a period of time, versus over-night.

    It is the debtor's duty to inform the court/clerk of any change in address as this would be how you would have received notices related to all of the events you state went on in your case without your notice/knowledge. Be forewarned that depending on the facts surrounding your case, the lack of notice may not be enough to reverse an action by the trustee since the trustee is tasked with selling non-exempt assets for the benefit of "creditors," and not for the benefit of a debtor.

    If you truly believe your trustee acted in violation of his/her duties under the Bankruptcy Code, you can file a complaint with the US Trustee and/or ask the bankruptcy judge for permission to sue your trustee or damages. This could become very messy; you should consult with an attorney in your district and/or the US Trustee.

    I am only licensed in the state of Illinois. This is only my general observation about the law and my experiences... more
  2. Scott Benjamin Riddle

    Pro

    Contributor Level 20

    4

    Lawyers agree

    Answered . Many things don't add up. If you had a lawyer, he/she was informed of the 341 (and would have known to ask if no notice was sent). Notice is also sent by mail. However, not attending your 341 is not a way out of bankruptcy, so it may or may not be an issue to specifically point out to the court. Even so, it is not a point in your favor and it is not a "mistrial." I've had cases representing Trustee where the debtor did not even complete schedules and the cases continued for the trustee to sell assets. Debtors have been in jail, or refused to answer questions based on their 5th Amendment rights. In one case, the police came to arrest a debtor at the 341. When their are assets for creditors, the case continues.

    Sales of property are governed by notice and hearing. Fees to the Trustee are governed by notice and hearing. All the events described are done by a notice sent to all parties and lawyers, and hearings, with an opportunity for all parties to attend and object. As the debtor, when assets are sold, you are the lowest on the priority list to get money back. I understand venting and frustration, but if you had a competent bankruptcy lawyer, he/she is the one to answer questions about the events in your case and how it turned out the way it did.

  3. Charles D Whelan III

    Contributor Level 7

    Answered . You do not explain why your case was converted from Chapter 13 to Chapter 7. You can consult a legal malpractice attorney to have the case reviewed to see whether your attorney steered you wrong in filing a Chapter 13 case, and to determine whether you should have filed at all. You may also want to consult an experienced bankruptcy attorney to review your case to see whether the trustee did anything wrong. If there are grounds, you can then consider making a complaint with the United States Trustee. As the others have said, you would be the last to receive a distribution in this scenario.

  4. Hermin A. Dowe

    Contributor Level 13

    Answered . You should be asking both attorneys some very pointed questions if the outcome of your case is as related

    Remember that on this forum attorneys try to answer your questions with limited facts available to them. My... more

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