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Brent Blanchard
Brent Blanchard, Bankruptcy Attorney
Category: Bankruptcy Law
Satisfied Customers: 1975
Experience:  Twelve years experience in all aspects of debtor & creditor BK.
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My family law attorney did not file motion to obtain my DSO

Resolved Question:

My family law attorney did not file motion to obtain my DSO from bankruptcy court. The bankruptcy court received funds from a self settled trust and would not pay DSO claiming it was property of the estate. I have had to pay late fees and have lost my credit rating due to this issue. My family law attorney claims that there was an automatic stay and she could not file for relief.
Submitted: 6 years ago.
Category: Bankruptcy Law
Expert:  Brent Blanchard replied 6 years ago.
Thank you for your question.

What precisely happened and what *could* have happened cannot be fully determined in this type of Q&A setting. However, making mention of a "motion" to obtain the DSO with the bankruptcy court goes to the heart of what *might* have been done and the right way to do it.

At the instant of filing bankruptcy, everything the debtor owns automatically becomes part of the BK "estate". It's all frozen until and unless permission is granted to do something with it. So, the family law attorney is correct, there was an automatic stay.

However, the debtor is obligated to identify all money or property "held for another" which is in his or her possession. IF (did I say IF?) the DSO is really considered to be held for the benefit of the other spouse, then that should be appropriately reported as such. A motion *can* be made for turnover of property that really does not belong to the debtor and which therefore should not be counted in the BK estate.

Finally, IF (did I say IF?) there is a basis to try for it, BK law *does* allow for motions for relief from the automatic stay. If one never asks, permission can never be granted. But if the facts and law give a good reason and a good chance of success, then a motion for relief can be filed, and often the relief requested in granted. Lenders do it all the time to resume foreclosures and repossessions in BK cases--and they get what they ask for routinely for "upside-down" car and land/house/commercial building loans (if the asset has no equity, the negative value means it's NOT needed for either paying off the creditors or administering the BK estate).

The big question, which I cannot answer, is whether the DSO fell into the category of assets/obligations that would have warranted a motion for relief from the automatic stay that would have had some reasonable chance of success. The yes or no answer to that (you would need a personal consultation for that) might (did I say MIGHT?) determine whether there is a legal malpractice claim for you to chose to pursue or abandon.

Thank you.

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