QUESTION
Is it unethical for an attorney to borrow money from a client knowing that he will be declaring bankruptcy and has no intention of paying back a loan?
Asked on May 15th, 2012 on Bankruptcy - Pennsylvania
More details to this question:
In 1996 my father-in-law had hired an attorney to settle his estate upon his death. My husband was only child and inherited $1M estate. Attorney asked to borrow money ($125,000) knowing how much we''d inherited. Within months attorney declared bankruptcy. When settled, we agreed to be paid back principal without interest. Was to be paid in full by 2004. Only half was paid back. We hired another attorney who helped us to get a judgment in local court. Sporadic payments but only under threat from our new attorney. He has now declared bankruptcy for the second time and owes IRS $600,000 in taxes and judge says we may never get paid. Don''t want to waste any more money on attorney fees because we already paid $10,000 and had to quit when my husband got cancer. Any chance we could ever get our money back?
1 ANSWER
Bankruptcy Attorney serving Burbank, CA
Partner at
Law Office of Mark J. Markus
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3 Awards
it's definitely unethical and something that should have been reported to your state bar association, but the bigger question is whether it is dischargeable in bankruptcy. Did you file a complaint objecting to discharge in his first bankruptcy case? If you can prove he never intended to repay the debt, or that he breached a fiduciary duty to you by borrowing the money, you should be able to have the debt declared non-dischargeable. Doing so requires you to file a complaint by the deadlines set by the court (usually within 60 days of the initial creditor's meeting date).
You don't indicate which Chapter he has presently filed so it's hard to guess at what if anything you will receive through the bankruptcy.
My suggestion is to hire a competent bankruptcy attorney in your area to fully analyze your options.
Mark J. Markus, Attorney at Law
Handling exclusively bankruptcy law cases in California since 1991.
http://www.bklaw.com/
bankruptcy blog: http://www.bklaw.com/bankruptcy-blog/
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Answered on May 16th, 2012 at 1:45 PM