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W.D.N.C.: In re Meabon- Frivolous Appeal; Failure to Disclose Assets

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By Ed Boltz, 6 August, 2014
Summary: Prior to filing bankruptcy, the Meabons first consulted with an attorney who informed them that they would need to disclose, as an asset in his bankruptcy schedules, Richard Meabon’s interest in a trust. As a result of the first attorney’s advice, the Meabons chose to file with another attorney, to whom they did not disclose the existence of the trust. After filing Chapter 7 without disclosure of the trust either in their petition or at the §341 Meeting of Creditors, the deadline to object to discharge passed on June 1, 2010. On June 2nd or 3rd, the first attorney notified the second, who, over the objection of the Meabons, alerted the Chapter 7 Trustee, who ultimately obtained the revocation of their discharge. The Meabons appealed, contending that the Trustee must have known of the trust before June 1st, since he sent two letters to their attorney on June 3rd evincing knowledge of the trust and that it would have not been possible to gain sufficient knowledge in two days. As 11 U.S.C. § 704(1) requires “the bankruptcy trustee to balance the need for expeditious conduct against the ‘best interests of parties in interest’”, the district court affirmed the finding that there was no evidence to dispute or question the Trustee’s speedy response and accordingly dismissed the appeal as frivolous. For a copy of the opinion, please see: Meabon- Frivolous Appeal; Failure to Disclose Assets For pertinent North Carolina State Bar Ethics Opinions, please see: 98 Formal Ethics Opinion 20   99 Formal Ethics Opinion 15

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