If an individual receives payment for services after filing for Chapter 7 bankruptcy, it may still be property of the bankruptcy estate. Florida residents may be interested in the finding of a bankruptcy judge in Massachusetts in that regard. In the case that was decided on Aug. 17, an attorney received $10,000 from a client after filing for Chapter 7 protection for services performed before the petition was filed. The attorney reportedly also billed his client for $291, $8,924, and $2,070 after the petition was filed.
While the debtor claimed that the money was for services rendered post-petition, there was no evidence of any discussions as to how the payments were to be applied. Furthermore, there was no discussion of a retainer for services after the bankruptcy occurred. Although the attorney represented his client after the bankruptcy petition was made, he was not paid for those services. Instead, he continued to do so at the urging of the client and of the court.
In a Chapter 7 bankruptcy case, a debtor’s non-exempt assets are liquidated and the money is turned over to a trustee for distribution to creditors. Typically, any money earned after the case begins is not property of the bankruptcy estate. In this case, the court did not find any evidence that the payments were intended for services rendered after the filing.
Chapter 7 bankruptcy is one method of obtaining debt relief for consumers who are struggling with overwhelming financial obligations. There are a variety of eligibility and other requirements that an attorney can explain, and federal and state laws provide a list of the types of assets that are exempt from liquidation.
