On March 27, 2019 the Bankruptcy Court for the Southern District of Alabama denied a fee request by Debtor’s personal injury (PI) attorney.
Prior to filing bankruptcy Debtor was involved in a car accident. She hired a PI attorney to represent her. When her bankruptcy case was filed, she listed the car accident on her schedules. Subsequently the PI case settled, and the Debtor signed a settlement agreement that indicated she was not in a bankruptcy. The Debtor filed a motion to approve the settlement in the Bankruptcy Court. The trustee demanded that the attorney’s fee be turned over to the bankruptcy estate.
The PI attorney stated he relied upon the Debtor’s statement in the settlement that she was not in a pending bankruptcy and therefore didn’t seek approval of the settlement and proceeds himself.
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