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socrateaser
socrateaser, Attorney
Category: Bankruptcy Law
Satisfied Customers: 32907
Experience:  Attorney and Real Estate Broker -- Retired (mostly)
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Bankruptcy

Customer Question

This question is related to my last 2 questions. Basically, I filed a lawsuit against my previous employer, then declared bankruptcy, now the Bankruptcy Estate is the Interested Party. The Trustee and I have concluded that I will continue the lawsuit pro se. The trustee and I negotiated a 50-50 split between us until we reach the estate settlement amount, in the event the employment lawsuit results in my favor. This is fairly urgent and I understand if it seems complex. I appreciate your opinion as a field expert please. 1) The trustee is asking for $5500 over my actual debt, (12.4% of the debt) be allotted to him, in any awards (included at the rate of 50-50.) Is this an average commission and is his commission protected under some “administrative fees” clause or statute? 2) In his Motion he states our agreement of a 50-50 split up to the X dollar amount. I don’t want that information public. Is he reasonably allowed to omit the exact dollar amount from the public motion and just keep it within the contract between him and me? 3) Lastly the Trustee states in his Motion “the debtor did not schedule the suit in her schedules, nor did she claim any exemptions for these claims,’ to paraphrase, but I did send notice of the lawsuit to the bankruptcy court and trustee before my hearing by mailing them an Amended Statement of Financial affairs. I’m concerned his statement that I did not schedule the lawsuit casts me in a bad light, as though I tried to conceal it from the Court. Is it a bad statement for me or is it just legal technical jargon?
Submitted: 3 years ago.
Category: Bankruptcy Law
Expert:  socrateaser replied 3 years ago.
1) The trustee is asking for $5500 over my actual debt, (12.4% of the debt) be allotted to him, in any awards (included at the rate of 50-50.) Is this an average commission and is his commission protected under some “administrative fees” clause or statute?

A: 11 USC 326 contains the statutory allowance for trustee administrative fees. If the trustee acts as an attorney on behalf of his office, he/she can charge attorney's fees on top of that. The motion should distinguish between the section 326 commission and attorney's fees. If it doesn't, and the fee is too high for the amount collected, you can object. However, there is some risk that if this all falls apart, the trustee could move to dismiss your entire bankruptcy for failing to list this particular claim. That may not be worth the risk.

2) In his Motion he states our agreement of a 50-50 split up to the X dollar amount. I don’t want that information public. Is he reasonably allowed to omit the exact dollar amount from the public motion and just keep it within the contract between him and me?

A: No. All administrative fees must be approved by the court.

3) Lastly the Trustee states in his Motion “the debtor did not schedule the suit in her schedules, nor did she claim any exemptions for these claims,’ to paraphrase, but I did send notice of the lawsuit to the bankruptcy court and trustee before my hearing by mailing them an Amended Statement of Financial affairs. I’m concerned his statement that I did not schedule the lawsuit casts me in a bad light, as though I tried to conceal it from the Court. Is it a bad statement for me or is it just legal technical jargon?

A: Without alleging the source of the claim, the trustee cannot lay claim to it. You can amend your bankruptcy schedules to add the claim, which would end any controversy. However, it appears that the trustee doesn't care one way or the other -- though it could be used as grounds to dismiss the bankruptcy entirely.

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