Opinion
No. 02-18758.
October 10, 2006
BENCH DECISION ON DEBTOR'S MOTION TO EMPLOY A PROFESSIONAL PERSON
Lynda V. Allen ("Debtor") has filed a motion (the "Motion") to employ Marie T. McDonnell d/b/a The Mortgage Counselor ("McDonnell") as "mortgage finance analyst, recovery specialist, truth in lending expert." Although Debtor is represented by counsel, she filed the Motion pro se. Although I ruled upon the Motion at the hearing, I announced then that I would issue a written decision.
The Motion has two parts. The first, captioned "Motion to Approve Employment of a Professional Person," recites Debtor's inability to obtain a correct mortgage balance from Mortgage Electronic Registration Systems, Inc. ("MERS") despite repeated efforts by her counsel. She seeks to employ McDonnell "to establish the true balance . . . once and for all." The second part, entitled "Application for Approval of Employment of Professional Person," recites the particular services which McDonnell will render.
MERS, the holder of the first mortgage on Debtor's home, filed an opposition to the Motion. It objects to the Motion's characterization of its activities with regard to the mortgage and McDonnell's qualifications as an expert, and asserts that the services which McDonnell would render are professional services more appropriately performed by a licensed accountant or attorney.
The powers of a Chapter 13 trustee are specified in 11 U.S.C. § 1302(b). They include some, but not all, of the powers granted to a Chapter 7 trustee by § 704. Other powers, dealing with the use and sale of property under § 363, are given to the Debtor exclusively by § 1303. The Motion recites that it is filed "[p]ursuant to 11 U.S.C. § 327(a) and Bankruptcy Rule 2014(a)."
Further references to section numbers are to Title 11 of the United States Code.
"The trustee shall — (1) perform the duties specified in sections 704(2), 704(3), 704(4), 704(5), 704(6), 704(7) and 704(9) of this title. . . ."
". . . the debtor shall have, exclusive of the trustee, the rights and powers of a trustee under sections 363(b), 363(d), 363(e), 363(f), and 363( l), of this title."
The statute relied upon by Debtor provides that:
"the trustee, with the court's approval, may employ one of more attorneys, accountants, appraisers, auctioneers, or other professional persons, that do not hold or represent an interest adverse to the estate, and that are disinterested persons, to represent or assist the trustee in carrying out the trustee's duties under this title."
11 U.S.C. § 327(a) (emphasis added).
It would appear from the quoted language that the power to hire professionals, at least those not to be engaged in the use or sale of property under § 1303, is vested in the Chapter 13 trustee and not the debtor. This is consistent with the trustee's powers under § 704 brought forward into Chapter 13, to "investigate the financial affairs of the debtor" and "if a purpose would be served, examine proofs of claim and object to the allowance of any claim that is improper. The stated purpose of the Motion is to obtain the services of an expert to determine the amount due, a traditional function of the claims process. There is nothing in the Bankruptcy Code giving a Chapter 13 debtor authority to deal with claims. The leading treatise, citing a single bankruptcy court decision from 1984, asserts that the debtor does have power to object to claims:
11 U.S.C. § 704(4), (5).
Although the responsibility to examine proofs of claim and object to the allowance of claims is assigned to the Chapter 13 trustee by 11 U.S.C. § 1302(b)(1), it has been held that the Chapter 13 debtor has standing to object to claims independent of the trustee. This makes sense because the debtor is best situated to know which claims are legitimate and in what amounts. The trustee must have the cooperation and attention of debtor's counsel and the debtor to effectively police the allowance of claims.
1 KEITH M. LUNDIN, CHAPTER 13 BANKRUPTCY § 56.2 (3rd ed. 2000), citing In re Dooley, 41 B.R. 31 (Bankr. N.D. Ga. 1984). My own research has found a few other cases supporting that view, at least where disputing a claim would result in a benefit to the debtor. See, e.g., In re Sims, 278 B.R. 457, 483 (Bankr. E.D. Tenn. 2002).
While I agree with Judge Lundin that it would be logical to give the Chapter 13 debtor the power to deal with claims, I am unable to write that authority into the statute. Given the present state of the law, the practical approach is probably for the debtor to work with the trustee and pursue the matter in the trustee's name. I hold that a Chapter 13 debtor does not have the authority to hire a professional to challenge creditors.
The motion is denied. A separate order will enter.