A Debtor, in a dismissed case, sent a letter to the Court demanding that their attorney return funds that the Chapter 13 Trustee gave them, brought up the issue on how does a Chapter 13 attorney get paid in a dismissed case. Counsel apparently had an assignment of such funds which was troubling for the Court. The Court, in a published decision, analyzed 1326(a)(2) and found that it applies. Having found that section 1326(a)(2) applies, the Court determined that it cannot compel payment of the funds to Debtor's counsel through operation of the assignment signed by the Debtor. The Court noted that Counsel could have filed a fee application and obtained a 503(b) claim but that did not occur. As a result, the Trustee was obligated to pay the money to the Debtor. However, the Court determined that it continues to have jurisdiction over fee requests despite the dismissal and could exercise its ancillary jurisdiction. Therefore, the Court ruled that Counsel needs to file the fee application, give notice and permit the Debtor to contest the reasonableness of the fees.
The moral of the story is... file your fee application because not all judges will be so nice!
In re Garris
No comments:
Post a Comment