Rehabilition Center discharged in Chapter 7

After my auto accident, I received a personal injury settlement for $16,000, my lawyer got his 3% (which was $12,000) My Chapter 7 was discharged in Jan 05, and the settlement was exempted for $23,999) Then my lawyer sued for Michigan No Fault loss wages, attendant care and medical bills. I forgot that I signed a lien for a rehab center (who I incidently claimed in my bankruptcy and the debt was discharged. The lawyer got a check for no fault benefits for $25,775. He is now saying that I have to send the entire amount to the Trustee. What can I do to avoid sending this money to them. I was off work for 1 year and a half, and could use the money to catch up, and I need a new roof? ( When working make $32,000, I have a utility bill of $1,000.)

I'm not trying to be rude or anything lol, but are you on paid meds as we speak? Theres some discrepancies in your post, please clarify things for us so we can more understand your situation.

I will clarify this post. It is so complicated, that I don't really know how to explain, being that I'm not a lawyer, but here goes:

(1) Was in a motor vehicle accident, and off work for one year.

(2) The insurance co, Farm Bureau, cancelled my insurance for medical payments to rehab and doctors.

(3) I was left with bills for Doctors and a Rehab Center, as well as other debts.

(4) I filed Chapter 7, all of the debts were discharged(including and especially the Rehab center who wanted $35,000.)

(5) Another seperate lawyer sued Farm Bureau successfully and he has the check right now for $25,775.

(6) The lawyer is telling me that I need to pay the Rehab Center $8,000, he will keep $8,000, and I will get $7,000.

( 7) I said, no the Rehab Center was discharge in Bankruptcy, I sent you a copy of the discharged creditors.

(8) Now he says if I don't pay the REhab Center, he will send the entire check to the Trustee.

Now does it make sense?

Okay think about it. Your debt to the rehab was discharged but now your lawyer has a check from a suit filed against them which he won. If you had paid the Rehab instead of discharging the debt the check most certainly would be yours but how can you expect to keep money that was intended to pay for something you did receive but didnt pay for to begin with. When you think about it you are being paid(sort of) twice for the same thing. You didnt pay them but you want to be compensated for not paying them? You also need to keep in mind that the trustee has a right to come after assets one year post discharge. Your lawyer is the legal beagle and I hate to say it, probably right. I think he is under obligation to forward assets to the trustee. You would be better off with $7k than nothing which is what you will get if it is sent to the trustee. I dont much like your lawyers attitude, however, because if the check is sent he wont get anything either...Wasnt the whole idea behind the lawsuit to sue for the money the insurance company refused to pay? And now the rehab center gets no money from you via the BK discharge and the second time no money from you because you want to keep the check? Your lawyer has the power - I would be happy I got $7k.

Yes, they probably do deserve to be paid, but not the whole check.
What is more complicated is that the Rehab Center does not want that amount. ($8,000) The want the entire check. In addition, the Rehab Center were not totally not paid anything, they were paid from my Blue Cross all along. And, what about me, I was off work for a year, although I did get 50% of my income from an Income Protection Insurance Policy. Does it really look like I'm greedy to you?

Okay let me get this straight because I guess I am totally ozone on this one. The Rehab Center did get money from Blue Cross? How much did they get and how is it they think they would be entitled to the whole check? I was under the impression they did not get paid because the insurance would not pay them. But what you are saying is they did get money. If that is the case how does your lawyer deduce they are deserving a $8k payment? How much was the bill to begin with? I totally agree insurance companies are a pain in the neck to deal with so you are preaching to the choir where they are concerned. They refused to pay for my husband's food when he had a stomach tube after paying for it for a few months, because they said it was like Ensure when it was not - it was his nourishment to survive. We even had drs send them letters and they still refused. It was totally outrageous. And by the way I am NOT judging you - just trying to figure out what is going on and see if I can help.

Now you see how complicated this lawyer is making this. Let me try to get my thoughts organized, this is what I am saying:

(1) The lawyer knew I filed for Bankruptcy, he has a copy of the petition, all the creditors, discharge, and copies of EOB from Blue Cross in which the rehab billed Blue Cross. Blue Cross paid some money, but not all of the money that they asked for, they have come with a figure that I owe $35,000.

(2) When he filed the lawsuit, he stated he didn't know if I would get anything or not, then he came up with that $8,000 for them, $7,000 and change for myself. The $25,775 check is made out to me and the lawyer. said for loss wages, medical, attendant care.

(3) So this leads up to the facts on the previous postings.

(4) I have talked to two other lawyers, who thought like you thought that I must be looney.

(5) One lawyer told me to file a grievance against my lawyer because it doesn't seem that he is trying to represent me, but instead in cahoots with the rehab.

(6) And finally, thank you for the info, because I didn't know that the Trustee can still act now, because my Chapter 7 was discharged January 2005. So I really don't have to give anybody anything, do I?

You are right this is complicated ...the debt was discharged in BK and then a different lawyer comes back and sues the insurance company for not paying the bill that was discharged? Right? I didnt know you could sue for a bill that wasnt paid to begin with(at least by you). That is so dicey given the backlash that could result from a trustee getting involved. And add to the fact the lawyer threatening to send the check to the trustee should tell you everything you need to know about your attorney and the trustees power. All of this leads up to what do you do next....Obviously since the attorney's name is on the check as well as yours, neither one of you can take the check and run with it. I am also curious about the fact the lawyer doesnt send your share to the rehab center since you didnt pay it anyway. I am not an attorney do I dont know how that is justified. However, he does have you right where he wants you given he is in possession of the check. Right, wrong or indifferent he is is calling the shots and you have to be so careful with this. You can rant and rave about it being unfair but if the lawyer carries out his threats to send it to the trustee it would be much harder on you than sharing the settlement with him and the rehab center because the trustee will consider the check an asset to do as he deems fit with it. I am wondering though how much legal trouble the lawyer can get into by simply keeping the check and in fact not sending it to the trustee...You have consulted other lawyers apparently with different results. I have to admit I am afraid of the trustee's power....they are like the 500 lb gorilla. I think if you elect to keep your portion you are rolling the dice that the trustee wont find out. Whatever you decide to do do it NOW and be sure everything is in writing so you are not left holding the bag..

Thank you for you thoughts and insight about this. By the way, the two lawyers that I talked to in Michigan thought I was crazy and made this up.
The lawsuit was supposed to be for Rehabilitation and I was going to a surgeon who thinks I might have to have Surgery. They were both paid by Blue Cross initially, just like the Rehab. Then, the Farm Bureau was supposed to kick-in. This lawyer told me I could sue Farm Bureau, but the lawsuit was supposed to be for loss wages, attendent care, and medical. So, now I called him and left a message on his voice mail that I am demanding that he settle this asap or else I will report him to the Attorney Grievance Commission
here in Michigan. He called me back and left a message to call him back. He sounded pissed. I signed the release for the check on December 29, 2005.
He has been screwing around with this since. I'm not going to call him back, I will wait until he sends me something in the mail. or wait until he calls and talks more positive. I have lost sleep over this, this is so wierd. One of the lawyers that I called for advice told me it wasn't profitable for him, so I should call the Attorney Grievance Commission, which is what I did. And anyway, If you receive a settlement one year after discharge, can't you really keep that money? Somebody, anybody...?

So you havent gotten your money despite the fact you signed a release for the check? I think you are right about the one year; at least that is what I was told.

There is nothing in the bk code dealing with assets sold or obtained within 1 year of filing. Where our poster has come to grief is this section of the code that states lawsuits {or the cause of action tat would allow a lawsuit to be filed} within 180 days of your filing date can be considered property of the bk estate. Apparently, Mi. has some exemptions to this rule.

http://assembler.law.cornell.edu/uscode/html/uscode11/usc_sec_11_00000541----000-.html

5) Any interest in property that would have been property of the estate if such interest had been an interest of the debtor on the date of the filing of the petition, and that the debtor acquires or becomes entitled to acquire within 180 days after such date—
(A) by bequest, devise, or inheritance;
(B) as a result of a property settlement agreement with the debtor’s spouse, or of an interlocutory or final divorce decree; or
(C) as a beneficiary of a life insurance policy or of a death benefit plan.
(6) Proceeds, product, offspring, rents, or profits of or from property of the estate, except such as are earnings from services performed by an individual debtor after the commencement of the case.
(7) Any interest in property that the estate acquires after the commencement of the case.

My 341 was done in barely 5 minutes. One of the questions I {and everyone that came before me} was asked was, "can you sue anyone".

I'd say your choices are, take the deal your lawyer offered or, play hardball and see if he eventually comes around since, he doesn't get paid until you agree to the terms. DO you have a written agreement as to his compensation?
I'd be a little careful pushing too hard and getting regulators involved. To cover himself, he just might report the entire situation to the trustee.

The check that the lawyer has, is that separate from the $23,999 that you exempted? If so, and if you have no way to exemp it, then it is part of your bankruptcy estate and it will need to all be sent to the trustee.

Nonexempt assets will lead the trustee to notify all creditors to file a claim for a portion. If you choose to pay the attorney & the creditor directly, in order to get some of the cash, you may find yourself in hot water withe the BK court. Your debts are discharged, which means that your creditors can not come after you for anything from post BK. But this $$ is from something that happened prior to the BK and is therefore part of your BK estate. Discharged creditors can file a claim for part of it.

Sounds to me like the attorney is trying to bribe you so he can get 1/3 of the check. Otherwise, he may get none of it (if you retained him after filing BK) or only a small part of it (if you retained him prior to BK, then the $$ you owe him is part of the BK debt).

No, this is a check (25,775) is from Farm Bureau. The $25,999 is the amount the Trustee filed a motion in Bankruptcy Court as an exemption. The personal injury lawsuit was pending prior to my filing bankruptcy. The same lawyer filed both lawsuits. A different lawyer filed the BK. The personal Injury was filed before bankruptcy, and the Farm Bureau was filed after the Bankruptcy was discharged in April 2005.

(1) When he filed the personal injury lawsuit, and my insurance benefits stopped from both Blue Cross and Farm Bureau, he filed a lawsuit with Farmbureau.

(2) When I filed BK, which was after the personal injury lawsuit, I told the lawyer that I was going to have to file bankruptcy because I was off work, and I had those high medical bills. Trustee stated I was only allowed $23,999. That is where that figure came from.

(3) The Personal Injury lawyer comes with the big idea to say that my pesonal injuiry lawsuit was really worth about $65,000. But since I decided to file BK, he was going only to make sure it settlemed for less because he "wasn't working for the BK Trustee " and couldnt see giving the Trustee the diffrence between his fee, and me only getting $23,999. So instead, he only wanted to settle for less than that, so the Trustee won't get anything. So the Personal Injury Lawsuit settled for $30,000.

(4) Now here is the good part: The statement the lawyer gave me
$30,000, less 3,000.11 for expenses,leaves $26,993.89 less 1/3 of that
his fee$8,997.96=$17,995.93 (my preliminary settlement)?, then he paid some of my medical bills out that to MRI $1427.; Neruological Surgeon, $$65.; and Med Dr., $155., Net roceeds to Client: $16,350.61. So he says, well you got below the $23,999. That way the Trustee won't get anything.

(5) He called me when he got this $30,000 check, but I had to call him and call him to get paid, he was always out of the office. It took me two months, after the check was written to actually get this money.

(6) Now he is cooking up this other scheme with this Farm Bureau Check.:cry:

The Farm Bureau suit is based on the same accident, that happened prior to BK? If so, those proceeds are part of your BK estate. Since the attorney handling the lawsuit may be looking after HIS interests more than yours, perhaps consult with your BK attorney?

Does the money still belong to the estate, even though the BK was discharged in April 2005, and the settlement was Jan 2006? could it be the attorney is holding on to the check from Farm Bureau, until April 2006. I don't really know for sure if that is the correct BK Code, a settlement recovery one year after BK discharge.

I think what Staci is saying is that it doesn't matter when the settlement was reached. What matters is the date of the incident that resulted in the settlement and the date on which the lawsuit was started. If the incident and lawsuit both started before you filed bankruptcy or before the discharge, then the settlement would be part of your pre-bankruptcy estate even though the actual settlement check was issued after the discharge.

I agree with Jenny and Staci...and I would be really hypersensitive to anything dealing with money pre-BK especially when your so called lawyer has threatened to expose the whole thing to the trustee. I think you need to strongly consider the fallout from all of this. I think I would talk to your BK attorney about it.

The 2nd lawsuit was commenced after the discharge and the settlement after the discharge.

The 2nd lawsuit was commenced after the discharge and the settlement after the discharge.

I think the laywer is being a shyster. Of course, that probably goes without saying. Sounds like he is threatening you to take the money under the table he offers, or he is going to give it to someone else.

Check the laws about exemptions for personal injury claims in your state. I believe those are allowed, but is there a limit..I'm not sure????

Your case is complicated. I think the real legal method is one way. Not one of them do this or I'll tell the trustee and you loose everything. You might tell him you are reporting his actions to the bar association and see what he says. You might get the entire check.!!!

Thanks so much for the information. What I have done is followed some of the advice given and called my BK Attorney. He said, that it is exempted.
I have stopped contacting the other lawyer by telephone. Any correspondence with him is going to be mail, and requesting an answer by mail. I just wonder is the check still good. I did not acutally see the check, I only signed the release, which I think came with check. It has been 90 days since I signed that release. I do also plan on making a complaint with the Attorney Grievance Commission here in Michigan. Thanks guys.

Ah,...........

The question here is how long after discharge or close did you receive the settlement??

Windfalls up to 180 days after close of a Ch 7 can be taken by the Trustee. If you receive an inheritance, win the lottery, etc, within the 180 day period after close, the Trustee can sieze all the funds.

Maybe that's what the attny is up to here. While it still doesn't sound all the best, it seems your attny is trying to see that you get something while still giving the Trustee something. The attny may be doing you a CYA favor if you're within the 180 days.

Ah,...........

The question here is how long after discharge or close did you receive the settlement??

Windfalls up to 180 days after close of a Ch 7 can be taken by the Trustee. If you receive an inheritance, win the lottery, etc, within the 180 day period after close, the Trustee can sieze all the funds.

Maybe that's what the attny is up to here. While it still doesn't sound all the best, it seems your attny is trying to see that you get something while still giving the Trustee something. The attny may be doing you a CYA favor if you're within the 180 days.

I think this lawyer is doing a CHW (cover his wallet) type of favor. It smells funny when you are given a choice, either take the small amount of money I'm offering, or I'll send it to the trustee. Maybe this is legal, but doesn't sound so to me. I though personal injury lawsuits were exempted. Perhaps I'm wrong.

Yes this personal injury lawyer is not looking out for me at all. My BK lawyer
informed me that this check is exempt because it was from Farm Bureau, and is for a disbility payment (loss wages, medical expenses, attendent, etc)
if you look at the website www.MichiganBankruptcy.com and look at Michigan Exemptions, I am allowed to keep "health benefits." This was a lawsuit to Farm Bureau for "no fault benefits" and the Bankruptcy Code is
600.6023 (1) (f). In addition, when I filed for BK, he presented a motion to the trustee for a exemption for up to $25,999. But, if you remember, I already got $16,000 from the personal injury lawsuit. This later lawsuit was for Insurance Benefits only.

But I am puzzled as to why he is insisting that I pay the Rehab Center, who was discharged in the Bankruptcy. I am really stressed and tripping on that one. It must be a cousin or something, I don't know.

Oh, I forgot to answer your questions about the 180 days.
My bankruptcy was discharged in April 2005. He sued Farm Bureau about 90 days after that, He got the check in December 2005, but didn't tell me until I asked. I signed a waiver from Farm Bureau in December 2005, not knowing he got the check yet, he did not tell me that he had a check when I signed the waiver. Then I thought, wait, where is the check. I called him back and said he had to hold on to the check until he found out the Bankruptcy rules.
That is when he can up with this BS. I don't have a check yet. I'm just wondering how long is this check good for, doesn't a check expire after a certain period of time, anyway, I'll just let my BK attorney handle it.

Guess what, I called the Trustee's office myself. (My BK attorney also called them) The trustee's office called me back and said that they don't want any money from my lawsuit. I called and left a message with the Lawsuit attorney jerk. I'm still waiting to hear from him. Now what??!!:blink:

Good luck with this sesame, you might call your attorney and tell him your filing a complaint with the bar in your state asking for an investigation into this matter. I would state that you want to do what is correct with the money, but he is taking way too long. I would also state you feel he is up to fraud. Understand, he can hide behind the I need to find out about bk rules, and probably just get told to hand over the money, but he probably won't want to be investigated.

Thanks for all your help. I am glad I found this Forum, it has really helped me. I am so frustrated. I keep myself busy, if not for that I would have lost my mind by now. The Lawsuit lawyer is about close to 70 years old, so he is an old Shyster (or however you spell it) So far, I have gotten nothing. :tongue:

Pick up the phone and call the local bar association, they should get thing rolling.