Creditor Expenses

[outadoe]

What is the name of your state? Ohio

I know a bankruptcy attorney can ask to have his fees paid out of the proceeds of a chapter 13 plan. My question is about a creditor_s expenses.

If a creditor objects to a petition and wins, can the creditor claim HIS expenses and get them paid from the proceeds of the plan?

I was looking at 11 U.S.C. §503(b) and it seems to say that some expenses can be paid to a creditor but I am not clear on whether that means to any creditor, to a winning creditor, etc. And what expenses might the creditor be able to take?

Thanks for any info you can offer.

[azatty]

The answer is "no." Section 503(b) is limited in its application. The only creditors who can recover fees are (a) an official committee of unsecured creditors (Chapter 11 cases), and expenses of members thereof; (b) creditors who, after court approval, recover fraudulent transfers or preferential payments; (c) creditors who prosecute a criminal action related to the debtor or its business; and (d) creditors who file an involuntary petition for a debtor. Incidentally, most of this kind of work is seen in a Chapter 11 case, not in a typical consumer case. Bankruptcy attorneys for the debtor are allowed to take fees in a Chapter 13 through the plan because it is an administrative expense specifically allowed. That rule does not, however, apply in a Chapter 7, so attorneys need to get paid up front in a 7.

Now, under Section 506, an oversecured creditor (meaning, the value of the collateral exceeds the debt secured by the collateral) is entitled to increase its claim in an amount equal to all reasonable fees and charges. Therefore, if the objecting creditor is an oversecured creditor, then you could get hit for fees.