Trustee filed motion to hire his law firm????

[bilbo]

Is it normal for the Trustee to file a motion to hire his law firm to represent him? I was a no asset case but will be an asset case now due to my tax refund.
Do they normaly do this due to the process of paying creditors, etc?
Or should I be worried now? Last day for objections to discharge is 3/14/2006

[Minnymouth]

It is common practice for a Trustee to hire his own law firm to hand any assets that have to be collected or sold.

Personally, I feel like this should NEVER BE ALLOWED.....
the Trustee is getting TWICE for the same job...........
Being your Trustee, and working as a lawyer to collect the money...... double dipping........

[SinkingFast]

If there are other attnys in the Trustee's firm, most likely one of them will act as the Trustee's rep. But, many small law firms are just a couple of attnys who are partners. So, when the "firm" gets a job, both partners benefit financially even tho only one of the attnys actually does the work.

I agree with Minny. It is double dipping and should not be allowed. If the Trustee is gonna incur legal fees, the legal fees should come from another BK attny. A third party that does not have a vested interest in the outcome of the claim. The Trustee has a vested interest. Your attny has a vested interest since he/she legally represents you. Trustees should be required to hire an attny who is completely seperate, a 3rd party, who stands to gain nothing or doesn't have to protect anything in the deal.

[bilbo]

Thanks for the answers--I found this after I posted.......


When Chapter 7 trustees plan to administer asset cases, they file with the court an "Application for Appointment of Attorney by Trustee." The "Application" generally, but not always, includes the hourly rate that will be charged by the attorney. It is not unusual to find the same trustee apply for hiring as attorney, quoting a fee of $185.00 an hour in one case, and a fee of $200.00 an hour in another case. In addition, some attorneys on the panel of Chapter 7 trustees provide a fee range in their application for employment instead of one hourly rate. Therefore, trustees that are appointed as attorneys have freedom to adjust their hourly rate according to their financial needs.


The Application for Appointment of Attorney for Trustee might require some explaining for those unfamiliar with Chapter 7 bankruptcy procedures. Chapter 7 trustees are authorized to hire attorneys to represent them. 11USC Sec. 503 provides payment to these professionals. Some trustees hire their law firm, and use attorneys working for the law firm to perform functions in the administration of bankruptcy cases. Some hire their law firms and themselves. In the Northern District of Illinois, Western Division, we most commonly see trustees hiring themselves to represent --- themselves as trustee. What makes the trustee hiring himself interesting, is the verbiage in Applications for Appointment. The trustee states that the trustee needs an attorney to "advise" him. The trustee is hiring himself, to advise himself.


This type of arrangement gives the trustee, who is also attorney for trustee/himself, the lawful right to "double-dip" from assets. He/she is paid once through incentive commission, and again for hourly compensation.

By the time he gets done there won't be anything left of that poor refund for the creditors lol

[SinkingFast]

Unreal!!

They find even more ways to pad their own pocket on the backs of other people's misery!!

[bkadv]

We found the same thing out, only by checking Pacer. Seems our Trustee sent the information to our attorney that he would also be the law firm handling the tax return, who in turn did not pass that information on to us.
Seems to be a common trend within these bk circles..hmmmmm....

[SinkingFast]

Let's do a little math here, shall we???

Say the Trustee decides to take a $20,000 asset. Trustee's fee here is 8.5%. That means the Trustee would get $1700 for taking that asset to distribute proceeds to Creditors.

But, if the Trustee hires themself to represent themself, while taking the $20,000 asset, and bills, oh let's say, 4 hours, at $200/hour for that representation, the Trustee/attny collects $800 for taking the asset to distribute proceeds to Creditors.

Now the Trustee and the Trustee turned attny get paid $2500 instead of $1700 on the same $20,000 asset that was taken to benefit the Creditors.

Isn't that $800 less repaid to Creditors???

Excuse moi??!! Didn't OUR elected Senators, and Representatives, and President vote and sign BK Reform into Law because WE were the ones supposedly ABUSING the system??!!

[bkadv]

Some of the things I've learned since filing bk have just been incredulous, and hard to believe, this being one of them. The other being just how mis-informed the debtor really is. Many times I've had to search for answers on the web etc...since our attorney does not return calls.

[SinkingFast]

Some of the things I've learned since filing bk have just been incredulous, and hard to believe, this being one of them. The other being just how mis-informed the debtor really is. Many times I've had to search for answers on the web etc...since our attorney does not return calls.

I think this may be why we didn't get a straight answer from any attny about our truck.

We aren't your typical upside down loan, or low level equity filers. In our case, we're looking to cover $8000 to $12500, depending on value used for the BK, in equity in the truck. We have $6000 in exemptions allowed for vehicles. Not one of the attnys gave us a straight answer about what will happen to the truck.

If we sell our truck before we file BK, we can pay off the loan, pay the IRS the taxes we owe, and maybe have money left to pay one State's taxes, and our attny's fee. If we sell the truck ourselves, we are in control of the proceeds of the sale.

One attny was gonna put us in a Ch 13 plan, so the truck wasn't an issue.

The others, that have said we are Ch 7, have given us various answers when I've asked them directly and pointedly about the truck.

One said he'd sprinkle our vehicle exemption around to make our vehicles unappealing to the Trustee. A little here and there. If the Trustee took a vehicle, the Trustee would have to pay us our exemption amount before anybody else got a penny. He lobbied very hard for us to keep the truck and take a payment plan with the IRS. "You like that truck? It's newer. Got warranty. You should keep the truck." kind of things he said.

The attny we felt most comfortable with, that we've decided to use to represent us, said he'd use the lowest possible value for our vehicles. Old, high mileage vehicles are only in "fair" condition at best for valuation purposes, he said. That would allow the attny to throw as much exemption as possible on our one newer vehicle. He also said, "Trustees don't like to mess with things that have loans on them."

Best case scenario I can figure,.......... The attny will have about $4000 vehicle exemption to put on the truck. That will still leave $4500 to $8000 of equity not covered.

Hubby takes the attnys at their word. We don't lie, so we should accept what the attnys say in good faith. As if they don't lie to us?? Hubby feels the attnys know the Trustees and the process better than we do. We are paying the attny to represent us so we should just accept what the attny says and go with it. The attnys are a part of the network and we aren't.

I'm thinking it's all bull hockey what we've been told. I think the attnys know the Trustees will go for the truck. I think it's a part of the "Good Ole' Boy" network thing. Any of the attnys, except the Ch 13 plan dude, would let us walk in there knowing full well we'll loose the truck. It's their way to let the Trustee some money on our BK. And the attny would be the first one to say, "I'm so sorry. I never expected this to happen. The Trustee doesn't usually do things like that. I was confident we put enough exemption on your truck to prevent this."