Opinion
Case No. 02-61069
May 31, 2002
MEMORANDUM OPINION AND ORDER
Hearing was held May 15, 2002 on motion by the U.S. Trustee to review debtor's transactions with attorney and to require disgorgement of fees pursuant to 11 U.S.C. § 329. The matter was taken under advisement.
Debtor filed a voluntary petition under chapter 7 of the Bankruptcy Code on February 12, 2002. The petition names John W. Bell as debtor's counsel. Bell is a general practitioner who does not practice bankruptcy regularly. Debtor's aunt, Carol Moore, encouraged debtor to seek counsel with Bell and paid Bell $800.00 towards his fee on behalf of Burgan. No payment has ever been made by the debtor directly.
On March 22, 2002, chapter 7 trustee Kevin R. Heunnekens conducted the § 341 meeting of creditors for the Burgan case. Debtor attended the meeting, but Bell did not. The Disclosure of Attorney Compensation of Attorney for Debtor, required by § 329, states that the total fee for Bell's representation would be $1,000.00 and that $500.00 was to be paid prior to filing. One of the services to be included in the total fee, as listed in the disclosure, is: "Representation of the debtor at the meeting of creditors and confirmation hearing, and any adjourned hearing thereof."
Bell filed the debtor's schedules of assets and liabilities with the petition on February 12, 2002.
Schedule A — Real Property, lists a house at 358 High View Road, Stanardsville, VA 22973, with a current market value of $55,000.00 and a mortgage of $28,900.00. Debtor claimed the equity in this house under the homestead exemption, which exceeds the $5,000.00 limit on a homestead deed.
The homestead exemption allows a party to exempt certain property selected by the party "not exceeding $5,000 in value." Va. Code Ann. § 34-4 (Michie 1996).
Schedule B — Personal Property, lists an automobile valued at $400.00 as the debtor's only item of personal property. The schedule states that debtor possesses no cash, household goods and furnishings, books, or clothing. In addition, debtor has filed a homestead deed claiming a $400.00 exemption in this automobile.
Schedule C — Property Claimed as Exempt, states that none of debtor's property has been exempted.
Bell filed a response to the Trustee's motion on April 26, 2002 and filed amended schedules on behalf of debtor on April 30, 2002. Debtor's amended Schedule B shows that his personal property includes cash, household goods and furnishings, books, clothing, an automobile, and various tools of the trade. Debtor's amended Schedule C lists a number of items of real and personal property debtor is claiming as exempt.
The court agrees with the U.S. Trustee that Bell's handling of this case is a cause for concern.
The failure to appear at debtor's § 341 meeting, along with the incomplete and inconsistent schedules filed with the court may have harmed the debtor in this case.
The U.S. Trustee has advised the court that Bell has been very cooperative since the trustee's motion was filed. Bell has made efforts to rectify the issues in this case and has stated to the court that he will not charge debtor for the services provided.
While the court appreciates Bell's good faith in resolving this matter, the fact remains that he undertook to represent debtor in this case when he was not qualified to do so. As the court stated at hearing, the practice of bankruptcy should not be entered into lightly; doing so places the client's interests in jeopardy. Bell's conduct in this case warrants a sanction against him by this court.
Accordingly,
IT IS ORDERED, that John W. Bell, bankruptcy counsel to debtor John F. Burgan, shall pay $100.00 to debtor as a sanction for counsel's failure to provide adequate representation to debtor in this case.