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

Asked over 1 year ago - Clarkston, MI

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?

Attorney answers (8)

  1. Benjamin Joseph Sansone

    Pro

    Contributor Level 10

    9

    Lawyers agree

    1

    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

  2. Gary D. Bollinger

    Contributor Level 19

    9

    Lawyers agree

    1

    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

  3. William Comingore Failey

    Contributor Level 7

    7

    Lawyers agree

    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.

  4. Manuel Alzamora Juarez

    Contributor Level 20

    8

    Lawyers agree

    1

    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
  5. Eric Charles Lewis

    Contributor Level 17

    8

    Lawyers agree

    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
  6. Christian K. Lassen II

    Pro

    Contributor Level 20

    7

    Lawyers agree

    Answered . Fee arbitration.

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

    Contributor Level 20

    6

    Lawyers agree

    Answered . Look at prior answers.

  8. Jeffrey Bruce Gold

    Pro

    Contributor Level 19

    4

    Lawyers agree

    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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