Creditor says to Trustee: Stick ’em up!

In a truly strange result in a bankruptcy case from Orlando, Fla., a sharp-witted quick acting creditor has snatched a debtors funds right from the hands of a Chapter 13 bankruptcy trustee!

Florida attorney Carmen Deluttri analyzed a case where the debtor couldn’t afford his Chapter 13 payments, and the judge in the case therefore signed an order of dismissal.

Typically what happens in this situation is that the trustee goes through his account, and draws a check for any funds that haven’t been paid out yet, and mails it back to the debtor. But in Orlando, before the trustee could mail off the money to the debtor, a savvy creditor’s attorney was able to procure an order from a state court allowing a garnishment.

This probably wouldn’t happen in either Massachusetts or New Hampshire, where state judges aren’t as aggressive in issuing garnishments as the judges in Florida, but I suppose you never know. The moral of the story appears to be don’t count on getting any money back in a Chapter 13 case, until a check is actually in your hands!


By Doug Beaton

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