PI settled and bk trustee took $38,000 from our settlement as fee. We would in the dark about it the whole time.

Husband injured in auto accident 2009. Filed for bk in 2010. Got discharged. Won PI in 2012 for $4oo k. Took 10 month to finally get money from trustee after paying off the $50,000 in debt back to creditors. Found out we also have to pay trustee's fee of $38,000. Can they do that?

Clarkston, MI -

Attorney Answers (8)

Benjamin Joseph Sansone

Benjamin Joseph Sansone

Personal Injury Lawyer - Saint Louis, MO
Answered

yes the bankruptcy trustee can charge a fee. However Imust be a reasonable fee. Talk with your bankruptcy lawyer in review the fee documents

Gary D. Bollinger

Gary D. Bollinger

Bankruptcy Attorney - Saint Louis, MO
Answered

You wrote, "Husband injured in auto accident 2009.
Filed for bk in 2010. Got discharged. Won PI in 2012 for $4oo k.
Took 10 month to finally get money from trustee after paying off the $50,000 in debt back to creditors. Found out we also have to pay trustee's fee of $38,000.
Can they do that?"

A: When a Chapter 7 bankruptcy Trustee finds assets to seize on behalf of Creditors of a bankruptcy debtor, the process of administration can take years if the asset is a chose in action or pending lawsuit.

The bankruptcy Trustee can continue administration of the bankruptcy estate assets long after the Order of Discharge has been entered in the case.

As Trustees do not distribute in kind, they must await the liquidatation of the the asset before starting the final phase of payout of the assets of the bankruptcy estate.

Upon liquidation of the assets, the bankruptcy Trustee sends out notices to Creditors to file their claims with adequate documentary proof, if these "proofs of claims" are accepted, the Creditor gets to share in the distribution of the money held by the bankruptcy Trustee.

The bankruptcy Trustee has the right to a commission for administering assets on behalf of Creditors. There are typically additional expenses.
The bankruptcy Trustee usually hires an attorney, upon court approval, who submits a bill for payment. Other professionals might also be hired (a realtor, for example) who would also be entitled to fees. Each of these parties may also bill for costs.

From this remainder of the bankruptcy estate, the Creditors obtain funds, that may be less than 100% of their proven claim

William Comingore Failey

William Comingore Failey

Car / Auto Accident Lawyer - Grand Rapids, MI
Answered

I recommend you speak with a new bankruptcy attorney about your options, and whether the Trustee has the ability to go after your settlement money so many years after discharge. Good luck.

Manuel Alzamora Juarez

Manuel Alzamora Juarez

Car / Auto Accident Lawyer - Berkeley, CA
Answered

I agree with Attorney Bollinger. Additionally, the Trustee must have submitted an accounting of all the funds paid to creditors, Trustee's lawyers, Trustee's fees and funds disbursed to you. In retrospect, it seems as if a Chapter 13, should have been a better filing for you. But, it all depends on the circumstances of your case. In a Chapter 13, the Trustee should have not have gotten more than 10 percent fee per year. However, the excess indicates that he may have had a lawyer intervene in your case. Talk to your own BK lawyer to explain this to you. Best of luck.

This answer is provided by Manuel A. Juarez, Esq., El Abogado de Accidentes de Autos de California: 510-206-4492.... more
Eric Charles Lewis

Eric Charles Lewis

Bankruptcy Attorney - Indianapolis, IN
Answered

As long as the court would consider the trustee's fee reasonable under the circumstances, what you describe sounds entirely legitimate.

Advice on this forum is for informational purposes only and should never be mistaken as a substitute for legal... more
Christian K. Lassen II

Christian K. Lassen II

Car / Auto Accident Lawyer - Philadelphia, PA
Answered

Fee arbitration.

Only 29% Contingency Fee! Phone: 215-510-6755 www.InjuryLawyerPhiladelphia.com
Kevin Coluccio

Kevin Coluccio

Car / Auto Accident Lawyer - Seattle, WA
Answered

Look at prior answers.

Jeffrey Bruce Gold

Jeffrey Bruce Gold

Car / Auto Accident Lawyer - Bellmore, NY
Answered

Your bankruptcy trustee permitted the action to go forward. He's entitled to a fee.

If you'd like to discuss, please feel free to call. Jeff Gold Gold, Benes, LLP 1854 Bellmore Ave Bellmore,... more

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