Expert: Los Angeles Bankruptcy Lawyer Leon D. Bayer - 1/3/2007

Question
My husband & I filed Chapter 13 Bankruptcy October 4, 2005. Said bankruptcy was discharged in April, 2005. The forgiven amount totaled $27,000.00.
In the meantime, our house was robbed blind October 30, 2005 & an insurance claim was filed. The claim was $64,000.00+ and insurance only paid out $46,000.00; said claim was paid out 10/24/06....almost a year later. To date we have not received any funds to replace all the stolen items in our home as the insurance company wrote the check out to myself, my husband AND the bankruptcy trustee. The bankruptcy trustee said they were entitled to all of the money. How is that possible when the forgiven amount was only $27,000.00 in the bankruptcy? Well, the attorney that handled our bankruptcy said that the trustee agreed to 50% and that we would be wise just to accept it. We said that we didnt want to because half of the check would be $23,000.00, meaning we have a bankruptcy on our record for only $4,000.00. Regardless, they drew up an order & took the money. My husband & I drove to the town where our attorney is located and endorsed the check almost 2 months ago & to date have still received nothing. Are we being taken advantage of here? We sure feel like it. I called the trustee and left a message & told her that I wanted to know exactly where all of the half was being distributed that she was keeping ($23,000.00) and rather than answer my question she called our attorney and told him that as far as she was concerned we weren't entitled to any of the money and not to be asking questions. I know that the amount of the claim was high but we had an endorsement for Full Replacement Cost on our property so we were to be paid for our property at the FULL replacement cost without depreciation. Please let me know what you think on this whole deal. I can't help but feel that we were robbed twice here.
Respectfully,
Melanie

Answer
I am terribly sorry that you are going through all of this.

I am a little confused, because you said you filed Chapter 13 bankruptcy, yet I sort of think you probably filed a Chapter 7? Also, I think you have the filing and discharge dates mixed up?

Anyway, it kind of sounds like it is too late to do anything differently, because the you signed an agreement and the court already made an order? I can't really give you an answer, other than to share my observations.

Hindsight is 20/20 as they say. There may be things that you could have done differently, such as converting the case to Chapter 13 and use the insurance money to pay off all creditors who filed claims, (you would have saved a bundle on trustee's fees, and man creditors never file a claim and thus you don't have to pay them)or you possibly could have litigated with the trustee over whether or not the proceeds from the insurance was is your exempt property. The attorney fees for representing you to fight the trustee may have been quite high, and it's possible that you would have wound up settling, anyway.