Tennessee residents who are filing for bankruptcy should be careful to keep records about when they performed certain services and when they were paid for those services. In Massachusetts, an attorney who filed for bankruptcy under Chapter 7 was ordered to turn $10,000 over to the bankruptcy trustee after a court ruled that payments made after the bankruptcy petition was filed were for work performed prior to the filing. Therefore, the court considered the payments to be part of the bankruptcy estate.
In a Chapter 7 filing, a debtor’s non-exempt assets are liquidated with the proceeds used to pay creditors. After filing for bankruptcy, the attorney invoiced a client for three separate payments in the amounts of $291, $2,070, and $8,924.
The court said the lawyer’s claim that the work was performed after the bankruptcy filing was not credible. It said that the lawyer had continued to represent the client in a civil case because he was asked to do so and not because more money had been exchanged.
A person who is struggling with debt might want to discuss the possibility of bankruptcy with an attorney. As this case demonstrates, being as accurate as possible and having documentation to back up any claims may be very important in a bankruptcy case. An attorney might be able to help prepare paperwork accurately so that the case is not delayed or dismissed due to errors. An attorney also may be able to discuss the different bankruptcy options available and which might be most appropriate for a person’s individual situation. Filing for bankruptcy is one way to stop creditor harassment, including wage garnishment and lawsuits, and it can also be the first step in rebuilding credit.