Chapter 13 Trustee Must Pay Debtor’s Attorney’s Fees before Refunding Money to Debtor in Chapter 13 Cases Dismissed Pre-Confirmation

Chapter 13 Trustee Must Pay Debtor’s Attorney’s Fees before Refunding Money to Debtor in Chapter 13 Cases Dismissed Pre-Confirmation

 The Debtor argues in the Motion that if this case is dismissed before the attorney fees of the Debtor’s attorney are allowed and paid by the Trustee, the Trustee thereafter cannot pay the allowed attorney fees, but instead must pay all the funds on hand back to the Debtor. For this proposition, the Debtor cites Harris v.Viegelahn, 135 S. Ct. 1829 (2015).

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4 Comments

  1. Charles Maglieri

    The reasoning in the case discussed is sound in every respect. The BK Judge correctly discerned the distinction to be made where a confirmed Chapter 13 case is converted to a Chapter 7, as in In re Harris as decided by the Supreme Court, and the case being dismissed prior to confirmation where the operative Code section is 1326(a)(2) not Section 348, as discussed. However, Section 330(a)(4)(B) carve out for compensation of officers is tied to employment under Section 327 as authorized by the Court; Debtor’s counsel are not retained as private attorneys under Section 327 nor under 330. Our compensation is regulated under Section 329 and Bankruptcy Rule 2016. However, I do agree that our compensation is nonetheless an Administrative Expense Priority under Section 503(b) thus allowed to be paid per Section 1326(a)(2).

    Charles A. Maglieri, Esq.

    Reply
  2. Kurt Thornbladh

    This is a discussion of the Eastern District of Michigan opinion in In re Fairnot. Fairnot’s attorney is Charles Schneider, a leading Debtor Chapter 13 attorney in the EDM. The narrow rule of decision is LBR 9024-1 which is based on Michigan Court Rule 2.119 dealing with motions for reconsideration of orders. Fairnot had five adversary proceedings in his case, including one against the IRS. Within the time limit Debtor’s counsel filed an application for fees seeking $9,987.00 in fees and $55.12 in expenses. I sincerely hope this case is reported, although since it depends upon a local rule, I am not expecting this to happen. I agree with Mike Plotkin, the case makes perfect sense, since it depends upon statutory interpretation. Great news in the Eastern District of Michigan.

    Reply

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