Dealing with account payable owed to Debtor on settlement agreement
Posted: Tue Oct 19, 2010 11:05 am
Debtor is owed money as part of a pre-petition personal injury
settlement. Debtor is owed approximately another $4,000, payable at
$700 per month. If the defendant in that action defaults, then
debtor is entitled to $14,000. Either way, the amount is fully
exempted under the wildcard.
Debtor filed Chapter 7 and defendant's counsel instructed him to
stop making the payments to the debtor arguing that it is property
of the estate and he can only pay directly to the Trustee.
I assume this is akin to the Wells Fargo situation that arises for
debtors who leave money in their accounts. Since I always advise my
clients not to do that, I've never had to deal with the problem.
What's the best way to handle this? Debtor wants (needs) the
monthly payments from the defendant. 341(a) is next week. Does it
make sense to contact the Trustee prior to the meeting? Should I
just file a motion to compel abandonment or is that premature until
the objections period has passed on exemptions under Rule 4003?
The defendant doesn't want to be in default in his agreement, so
what happens if he starts sending money to the Trustee unsolicited?
Finally, if defendant doesn't do anything, can we take the position
that he in fact defaulted on the payments (put on the other hat and
pretend you're representing the defendant)?
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Mark J. Markus
Law Office of Mark J. Markus
11684 Ventura Blvd. PMB #403
Studio City, CA 91604-2652
(818)509-1173 (818)509-1460 (fax)
web: http://www.bklaw.com/
This Firm is a Qualified Federal Debt Relief Agency (see what this
means at
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