Case Summary:
When debtors have a post-petition personal injury claim that is exempt, the entire amount is exempt including an amount paid to the attorney out of the settlement funds.  Having received payment from the debtors, even though from exempt funds, the debtors' attorney was required by section 329 and Rule 2016(b) to disclose the agreement to receive the fees and receipt of the fees within 15 days.  The debtors' attorney failed to comply with the Code and Rule, and was erroneously informed by the trustee that she had to apply for the fees.  She did not have to apply for fees, she only had to disclose the fees received.  Under the mistaken impression that she needed court approval to receive the fees, the debtors' attorney returned the $2000 payment to her trust account, but when asked by the Court whether she had received the funds misrepresented to the Court that the funds were in her trust account where they had always been.  The court ultimately learned that the debtors' attorney had returned the funds from her operating account to her trust account immediately prior to the hearing.  While not material to the issue of whether the debtors' attorney had earned the fees under section 330, the attorney's misrepresentation was material to an analysis under section 329.  Although the misrepresentation was not ultimately very serious, the court sanctioned the debtors' attorney $1000, forwarded the opinion to the Wisconsin Office of Lawyer Regulation, and published its decision.