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Phillips Esq.
Phillips Esq., Attorney-at-Law
Category: Bankruptcy Law
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Experience:  B.A.; M.B.A.; J.D.
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A law firm represented a client in a fraud case. Against the

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A law firm represented a client in a fraud case. Against the defendant, the client was awarded $25k for actual fraud damages, and the law firm was awarded $8k in attorney's fees. The defendant then filed bankruptcy and listed the $25k and $8k claims. The client's attorneys then filed an Adversary Complaint to request non-dischargeability for the $25k and $8k claims. The defendant and client's attorneys agreed to settle the $8k attorney's fees claim out of court for $1k. There were no settlement talks for the client's $25k claim. However, in the settlement agreement, it states that the attorneys will dismiss the Adversary Complaint (which included the client's $25k) in exchange for the $1k settlement.

Can the client's attorneys drop her $25k non-dishargeability claim in such a manner?
Submitted: 1 year ago.
Category: Bankruptcy Law
Expert:  Phillips Esq. replied 1 year ago.
Thank you for giving me the opportunity to assist you. Kindly use CONTINUE or REPLY button to ask for clarification or follow-up questions.



Question: A law firm represented a client in a fraud case. Against the defendant, the client was awarded $25k for actual fraud damages, and the law firm was awarded $8k in attorney's fees. The defendant then filed bankruptcy and listed the $25k and $8k claims. The client's attorneys then filed an Adversary Complaint to request non-dischargeability for the $25k and $8k claims. The defendant and client's attorneys agreed to settle the $8k attorney's fees claim out of court for $1k. There were no settlement talks for the client's $25k claim. However, in the settlement agreement, it states that the attorneys will dismiss the Adversary Complaint (which included the client's $25k) in exchange for the $1k settlement.

Can the client's attorneys drop her $25k non-dishargeability claim in such a manner?


Response
: No. Since the Client's case was part of the Attorneys' case, the Attorneys should not have settled the case without the Client's consent. Put in another way, the Client should have been part of the settlement. The Attorneys should have tried to get something for the Client just as the Attorneys got something for themselves. So, the Client should insist that the Attorneys continue with her case or get a settlement from the Defendant. Otherwise, the Client can file complaint against the Attorneys with the Attorney Discipline.

Phillips Esq., Attorney-at-Law
Category: Bankruptcy Law
Satisfied Customers: 12964
Experience: B.A.; M.B.A.; J.D.
Phillips Esq. and 2 other Bankruptcy Law Specialists are ready to help you
Customer: replied 1 year ago.

What, if any, is the statute of limitations on a non-dischargeability claim based on fraud? (Or does the the creditor lose the opportunity to dispute dischargeability if they do not bring a non-dischargeability claim before the Order of Discharge?)

Expert:  Phillips Esq. replied 1 year ago.

What, if any, is the statute of limitations on a non-dischargeability claim based on fraud? (Or does the the creditor lose the opportunity to dispute dischargeability if they do not bring a non-dischargeability claim before the Order of Discharge?)



Response: The creditor has 60 days from the conclusion of the Section 341 Meeting to object to the Dischargeability of the debt. Otherwise, the creditor is barred from bringing the matter to the Court ever again. The Order of Discharge is usually issued within 10 days of the expiration of 60- day deadline for objections to Discharge. So, the creditor would be too late if objecting after Discharge Order has been issued in the case.

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