What Rights Do I Have When My Debt Settlement Company Allegro Law Went Bankrupt? – Deborah

“Dear Lewis,

I was paying thru Allegro Law for my debts and they filed bankruptcy in 2010. I filed a claim for my $ in November 2010. They said on their website about paying back it will determine if I paid the $ before or after they filed bankruptcy.

I paid before they filed bankruptcy. Does that mean I should get all my money back. I feel like it is taking forever. They said that there are several procedures before any $ will be issued. Why is it taking so long. I am thinking about suing them. I tried to do the right thing and now I had to pay a large amount to file bankruptcy. I am in such debt from having them scam me and now paying to file bankruptcy. What rights do I have?


Dear Deborah,

I am sorry for your trouble with Allegro Law. I see that they filed chapter 7, and I also see a website that has a list of all claimants who have filed a proof of claim. Your name was listed.

Since your claim arose before the case was filed, then you are a claimant. Especially with a corporation, and I am sure with they type of corporation – a law firm – the bankruptcy could take quite some time to finish this case.

The most important advice is: You cannot file a lawsuit against Allegro Law. There is an automatic stay against any legal actions. So you don’t want to run afoul of a bankruptcy judge’s order.

Also, since they filed bankruptcy, the assets have already been “protected” by the trustee. So in more than one way, there is nothing for you to gain by filing a lawsuit.

The bankruptcy trustee has set a date for all claimants to file claims. I am not sure if that has passed, but your claim is acknowledged.

At this point, I have no idea how much in assets the trustee is able to liquidate for the benefit of all creditors. Eventually the trustee will pay claims in order of priority rank and by pro-rata percentages.

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Unfortunately, an unsecured claim like yours (assuming yours is an unsecured claim) basically has one of the lowest priorities.

But as an example, if the trustee liquidates $100,000 in assets, but there is $10,000,000 in claims, and your claim is for $2,000 for a bankruptcy fee, then you would only recover $20.00 (your pro-rata share of all claims).

For creditors, unfortunately, this is a common occurrence in chapter 7, pennies on the dollar, or sometimes nothing at all.

It is an awful situation for you, but please don’t let this deter you from seeking further legal help if you should need it. If you are still looking for a bankruptcy attorney, I strongly encourage you to visit www.NACBA.org to find a qualified attorney in your area.

You can click here to find a local bankruptcy attorney.

My name is Lewis Roberts and I’m an attorney licensed in Florida and Georgia. My practice focus is consumer bankruptcy, real estate issues/closings, and mortgages. I also have Florida real estate broker and mortgage broker licenses. I am a proud member of the National Association of Consumer Bankruptcy Attorneys (NACBA), National Association of Consumer Attorneys (NACA), and a graduate of Max Gardner’s Bankruptcy Boot Camp. I enjoy helping people with decisions that impact their financial well-being.

Legal Disclaimer: This is for educational purposes only. It is not to be relied upon as legal advice. It also does not create an attorney-client relationship. No such relationship is formed with attorney without a written agreement.

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