Just discharged a Chapter 7

[DenverDenver303]

In Colorado.

Just discharged a Chapter 7. One creditor that showed at my 341 hearing is an attorney that my business retained several years ago. He attended the hearing and attempted to do what, I'm not sure. Anyway, after my bankruptcy discharged, he served me bill then a lawsuit against my business, charging me for his time at my PERSONAL bankruptcy.

He claims his fee agreement says he can do this.

Can he sue my company, an S Corp., for his time pursuing pre-petition debit at my PERSONAL BK??

[GaAtty]

He can sue your company but may not win if your have run your business correctly, that is, kept your personal finances totally separate from your business finances. However, you should have listed him as a creditor and this would not have happened. You can re-open your bankruptcy and add him as a creditor, and it will cost a little to do so. It will probably not cost nearly as much as his bill, however. If you look at the bankruptcy documents that you filed, you swore under penalty of perjury that you listed ALL of your creditors and ALL of your assets. So you did not do that. When you re-open your bankruptcy and add this person, make sure that you include him and ALL other creditors. The bankruptcy court will not be pleased if you mess up a second time. Perjury in federal court is a serious matter.

[DenverDenver303]

He was listed as a creditor, that's why he showed up at the 341. My BK was personal and he did work for my company. He intially attempted to sue me personally. When I filed BK, he attaended the 341. The day I discharged th personal BK, I received a suit against my business. The question, can he charge sue my business for his time attending my personal BK?

Originally Posted by GaAtty

He can sue your company but may not win if your have run your business correctly, that is, kept your personal finances totally separate from your business finances. However, you should have listed him as a creditor and this would not have happened. You can re-open your bankruptcy and add him as a creditor, and it will cost a little to do so. It will probably not cost nearly as much as his bill, however. If you look at the bankruptcy documents that you filed, you swore under penalty of perjury that you listed ALL of your creditors and ALL of your assets. So you did not do that. When you re-open your bankruptcy and add this person, make sure that you include him and ALL other creditors. The bankruptcy court will not be pleased if you mess up a second time. Perjury in federal court is a serious matter.

[cosine]

Originally Posted by DenverDenver303

He was listed as a creditor, that's why he showed up at the 341. My BK was personal and he did work for my company. He intially attempted to sue me personally. When I filed BK, he attaended the 341. The day I discharged th personal BK, I received a suit against my business. The question, can he charge sue my business for his time attending my personal BK?

If he was doing work for the business, he has a right to be compensated for his services by that business. Someone at the business with the authority to do so would have had to authorize that in some way. I assume you are not the only person involved in that business. If you own part of a business, then the business may have an interest in the proceeding even if they are not a creditor. What do the other business owners have to say about that?

[DenverDenver303]

I am the only person in the business authorized to make any decisions. He was attending the 341 to "collect" what he believes the business owes him. This is a personal m,atter. He had me served, prior to the bk, and received a default (I was never served). I sent in a motion to dismiss citing defective service. In court he admitted service was defective and increased the $400 principal to $1400. He is charging me for addiotional work related to his defective service.

Originally Posted by cosine

If he was doing work for the business, he has a right to be compensated for his services by that business. Someone at the business with the authority to do so would have had to authorize that in some way. I assume you are not the only person involved in that business. If you own part of a business, then the business may have an interest in the proceeding even if they are not a creditor. What do the other business owners have to say about that?

[cosine]

Originally Posted by DenverDenver303

I am the only person in the business authorized to make any decisions. He was attending the 341 to "collect" what he believes the business owes him. This is a personal m,atter. He had me served, prior to the bk, and received a default (I was never served). I sent in a motion to dismiss citing defective service. In court he admitted service was defective and increased the $400 principal to $1400. He is charging me for addiotional work related to his defective service.

Be sure he is "fired" as the attorney for the business ASAP. Hire another.

Why was this attorney listed as a creditor on your personal bankruptcy? Did you personally owe him money? That he was listed as a creditor and/or was owed money opened the door for him to attend. But like you say, this is about your personal debt to him. Was that discharged?

If you still own the business, how is it that the business was not part of the assets used to pay your personal creditors? I don't know all the rules on transfer of a Chapter S Corp to creditors (it can affect the qualification to be an S Corp). I can certainly see a risk that the business itself might be dissolved or transferred or file its own bankruptcy to deal that. If the business were distributed to your personal creditors, that can also affect what the business' creditors could get, in the end. So I can see how he had an interest in being there.

Prior to your personal bankruptcy, did the business owe this lawyer some money? If it was already past due, or in default, then attending your personal bankruptcy hearing could be considered a legitimate part of his collection effort. However, if this is his angle, then it should be part of the collection costs for that debt, not a separate charge for services.

I do see a problem with him charging another $1000 just because he made defective service.

In any case, we need the details of all debts owe to him by you personally (that were discharged) and by the business (prior to the "new" charges) in order to give correct advice. This does sound like a matter for the business, and something complicated enough you need a lawyer for. But can the business afford one if it could not pay the first lawyer?

[DenverDenver303]

This attorney provided service in 2005. After service was provided, we had a balance of $400. We bartered out the difference. He wasn't happy with our service. So, he sent me a bill for the remainder. I sent him a bil for my services - his wife received the bill. The service was for he and another woman: first problem.

He attempted to sue me personally DBA my business. The BK was filed and he attended the haering and sent my business a bill for services rendered.

The business has zero assets so none were distributed. He attende my PERSONAL BK for a debit owed by the business that I also signed as personal guarantor. Think this is a bit too complex to attempt to commuinicate here. Bottom line, he is trying to collect $6k for what was originally a $400 debit.

Originally Posted by cosine

Be sure he is "fired" as the attorney for the business ASAP. Hire another.

Why was this attorney listed as a creditor on your personal bankruptcy? Did you personally owe him money? That he was listed as a creditor and/or was owed money opened the door for him to attend. But like you say, this is about your personal debt to him. Was that discharged?

If you still own the business, how is it that the business was not part of the assets used to pay your personal creditors? I don't know all the rules on transfer of a Chapter S Corp to creditors (it can affect the qualification to be an S Corp). I can certainly see a risk that the business itself might be dissolved or transferred or file its own bankruptcy to deal that. If the business were distributed to your personal creditors, that can also affect what the business' creditors could get, in the end. So I can see how he had an interest in being there.

Prior to your personal bankruptcy, did the business owe this lawyer some money? If it was already past due, or in default, then attending your personal bankruptcy hearing could be considered a legitimate part of his collection effort. However, if this is his angle, then it should be part of the collection costs for that debt, not a separate charge for services.

I do see a problem with him charging another $1000 just because he made defective service.

In any case, we need the details of all debts owe to him by you personally (that were discharged) and by the business (prior to the "new" charges) in order to give correct advice. This does sound like a matter for the business, and something complicated enough you need a lawyer for. But can the business afford one if it could not pay the first lawyer?