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socrateaser, Attorney
Category: Bankruptcy Law
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Experience:  Attorney and Real Estate Broker -- Retired (mostly)
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Question for a Bankruptcy Judge or Bankrkutpcy attorney only:A

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Question for a Bankruptcy Judge or Bankrkutpcy attorney only:

A Bankrutpcy Judge ordered mediation in a chapter 7 and told the attorney for the trustee that the trustee (holding debtor's funds) can pay for mediation expenses and legal fees for an attorney helping the debtor because it will benefit the Bankruptcy estate.
The debtor has open pending claims against the trustee that have been suspended pending mediation

Is there any case law or Bankdruptcy law from the 9th circuit that would provide reason or allow this payment from the trustee who is holding the debtor's money?
I really admire your perseverance. You are truly remarkable.

In In re Walter, 83 B.R. 14 (9th Cir. B.A.P. 2/3/1988), the bankruptcy appellate panel wrote:

  • The bankruptcy court properly relied on case law whereby courts had held that personal living expenses for debtors and their families, as well as attorney's fees which benefited the debtor as an individual, but not the bankruptcy estate, could not be paid out of monies or assets of the estate. The bankruptcy court has authority to deny the debtor use of estate property for living expenses for himself or his family. United States v. Sutton, 786 F.2d 1305 (5th Cir. 1986); In re Vincent, 4 B.R. 21 (Bankr. M.D. Tenn. 1979). Similarly, the bankruptcy court has authority to preclude use of estate property for payment of attorneys where services benefit only the debtor, and not the estate. In re Rhoten, 44 B.R. 741 (Bankr. M.D. Tenn. 1984); In re Duque, 48 B.R. 965 (Bankr. S.D. Fla. 1984); In re Spencer, 48 B.R. 168 (Bankr. E.D. N.C. 1985); In re Taylor, 66 B.R. 390 (Bankr. W.D. Pa. 1986).


It seems that the law in the 9th Circuit is that the court has the authority to pay expenses of the debtor where there is some benefit to the ultimate preservation of the estate assets.


Hope this helps.


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Customer: replied 4 years ago.

Thanks for the positive remark & your response. I am going to use it today.


Yes - I requested an investigation because one of the many trustee lies stated my tenant was unauthorized because he wanted to sell asap & had to get rid of tenant.


I had to file all of the info proving the trustee & attorney knew of rental & I was paying the mortgage with my rentals.

Judge ordered mediation to get rid of my appeals. trustee's attorney didn't want medition just sell.

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