I am about to receive funds from a lawsuit. Since I filed Chapter 7 bankruptcy last year there is a bankruptcy trustee. The trustee is saying that all the money must first go to him and after he pays the creditors that have filed and deducts his fee, He will disburse the rest to me. My question is why my estate lawyer cannot give that portion that is due to the trustee and give me the balance left directly.
Why should the trustee receive the entire amount?
Please review with your attorney. The trustee gets to "stand in your shoes." Meaning, whatever is coming your way, the trustee is the recipient of the asset. In the liquidation process, the trustee is the one who authorizes the sale or liquidation of assets, and the bankruptcy code allows the trustee to be compensated for this work. But then, you state you filed Chapter 7, but posted your question under Chapter 13, so please review with counsel.
I am not your attorney unless you and I have signed a retainer agreement. What I am saying is not legal advice. Do not act on this information without engaging my services, this is for consideration only.
Because it is not your lawsuit anymore. When you filed bankruptcy, everything you owned became part of your bankruptcy estate and your ?Ch7 trustee controls that estate. Effectively it is his (her) property. The trustee has a duty under the law to administer that property for the benefit of your creditors and also for you, but as part of his rights and duties, he gets to take than money, then pay your creditors, then pay his trustee fees and attorney's fees, then you get whatever is left over. Expect the process to take several months.
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The entire settlement is property of the bankruptcy estate, and the Trustee is entitled to receive the entire settlement (assuming that the cause of action was pre-petition). If you were represented by counsel for your bankruptcy, you should contact your attorney immediately to see if there are any exemptions available to you to protect the settlement. If you were unrepresented, you should probably seek an attorney in your area who is well familiar with your state's exemption statutes. You might be able to request that the trustee file an asset report, review the claims as they come in, and accept payment in the exact amount to pay those claims and then the trustee fees, and allow you to keep the rest. Most trustees prefer to receive the entire amount and then remit to you any leftover amount. Ultimately, that is up to the trustee.
He will have to provide an accounting for everything and you get to object if anything is illegal. But the trustee gets at least as much as needed to pay all the claims and himself.
The dialogue on this website does not constitute legal advice nor does it form any sort of attorney-client relationship.
You should be able to receive any money from that settlement that you claimed as exempt on your bankruptcy petition. The exempt proceeds should be disbursed to you prior to or at the same time as the balance of the proceeds going to the Trustee. You should discuss this with your attorney.
First make sure your Chapter 7 bankruptcy exemptions have been properly filed because a certain amount of proceeds from a personal injury lawsuit you are allowed to retain, I believe it is the first 21,000. However after the exemption amount the trustee is correct the money goes to the trustee, the creditors, and then to you. No person is above the law. Its about the money of course.
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