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Why would a trustee in Chapter 7 request to hire a law firm to represent the trustee for a debtor abuse case?
Anonymous3 views3 answers
My ex filed a fraudulent Chapter 7 petition for bankruptcy and a federal prosecutor investigated and appeared at the hearing. He was confronted with many lies about income, assets and expenses by the prosecutor. The meeting was rescheduled for two months. now the Trustee has filed for and approved to hire a firm to represent him, the trustee on this case.
I am not sure what this means. Will the debtor be prosecuted? He was offered to withdraw and refile Chapter 13 and his attorney said no. Since I was listed as a creditor I appeared at the first hearing and will appear at the next hearing but would like a heads up of what I am walking into for safety reasons.
Robert A. StumpfBankruptcy AttorneyStaten Island, NY ·
In many situations, the Trustee will hire an attorney to represent the interest of the bankruptcy estate. It is nothing very unusual. Here, I would suspect that the trustee is seriously considering filing a denial of discharge proceeding against the debtor, which is a very serious sanction. As a creditor, I don't think you'd have much to worry about, in fact, it's probably good news from your prospective-- at the end of all this, there is a chance that your husband won't be able to discharge his debt to you. These are the consequences he faces for trying to defraud the bankruptcy court.
The Trustee is hiring outside counsel to assist the bankruptcy estate in obtaining assets for him/her to seize for distribution to creditors. The reason the Trustee does this is because they are very often ill-equipped to do this work with the resources they have so they get outside counsel (usually a larger firm if the Trustee happens to be a solo practitioner.)
Now the appearance of the Federal Prosecutor is a different thing altogether. If in fact that did occur (are you sure it wasn't the United States Trustee---which is an arm of the U.S. Attorney's office?). In any event, in addition to the CIVIL liability that the Chapter 7 Trustee is looking at, there may be CRIMINAL liability and that will be the focus of the U.S. attorney's office.
It appears your ex-husband really blew it. The trustee is requesting a lawyer to represent the bankruptcy estate to seek a denial of discharge, meaning denying his bankruptcy altogether. On the flip side, it sounds like the U.S. Attorney is seeking bankruptcy fraud charges. He could be in a lot of trouble. If you are a creditor, then you probably are ok.
