Fraudulent Judgment Question

[SOTIRED]

I will try to make a long story short...

There is a judgment against my husband and myself personally that stems from a business debt. The debt that this stems from is a home building business and was between us and another couple who we were in business and the judgment was granted to the developers. The promisory note signed that eventually created the judgment was secured by colatteral(real estate, dump trucks and trailers). The colterall was all in the business associates name( who filed BK and have been discharged). When they filed bankruptcy the collateral was released to our creditor(so to speak) prior to them getting judgment against my husband and myself. The collateral is/was in excess of the amount owed. They then released our previous business owners from the case due to the stay and then went into our local county courts and acted as if they had received nothing and were granted full judgment against us. While I clearly feel that this is fraud on our courts system (creditor purposely used two seperate attorneys to handle each law suit, we have not had the means to hire an attorney to fight it. They have been very aggressive in this matter as far as to ask me about my engagment ring and selling it and trying to garnish wages. We have had the most horrible 3 years of our life and owe a great deal of this to these horrible people. I have often thought that we have case against them for fraud and malicious behavior....SO MY BIG QUESTION IS...WOULD THE TRUSTEE DO ANYTHING WITH THIS MATTER? OBVIOUSLY WHEN WE FILE FOR CH 7 AND ARE DISCHARGED WE WILL THEN REQUEST FOR IT TO BE REMOVED BUT CAN THE TRUSTEE DO ANYTHING MORE...OR WOULD THEY FOLLOW UP WITH CASE IF WE INTIATED IT PRIOR TO BANKRUPTCY

(as a side note- we were not present or aware of hearing for summary judgment, our atty who we could no longer afford (BIG SURPRISE) withdrew from our case 2 days before and never notified us of any hearing nor were we served with judgment order until 60 days after it occurred- and then could no longer appeal it)

any help or opinions will be very appreciated

Not sure if it matters but we are in FL

[emoney]

You appear to have a legal and professional claim against your former attorney.
You need to seek the advice from an attorney that will seek damages from your former attorney.
You should also look into filing information against him with your state bar.
regards,
emoney

[SOTIRED]

Thank you so much for your reply!!!!

I have also wondered about my attorneys role in the matter but never have seeked legal advice on his obligations. He had made a motion to withdraw because we owed him money. We had paid that money prior to him withdrawing but the day before the hearing for a motion to withdraw his office called and demanded a 5000 retainer (all previous retainers were 1000-1500 of even ever required) because of our slow payment. It was just impossible to come up with.


But with all of that I have no way of spending money to get a new atty for that matter BUT I had read somewhere that the trustee will file suit against someone that had submitted a fraudulent claim, so my main question was would the bankruptcy trustee go after these judgment creditor who is trying to essentially be awarded two judgments against one debt by using the different court systems against themselves?

[emoney]

Again, contact your local or state bar association and seek out an attorney that deals in legal malpractice. If you have a case they may take it on a reduced fee or no fee basis.

During this time also file a claim with the state bar against them. Get an attorney to look over your claim before filing. That will cost only a few $$$.

At least you will know if you have a claim. If the first will not take your case keep looking.
regards,
emoney

[HHM]

You have a lot of issued going on there...but let me try to address your basic question.

A cause of action (your potential lawsuit) would be an asset of your Bankruptcy Estate when you file BK. As with any asset in a chapter 7 case, in order for you to "keep" that asset you either need to exempt the asset or the trustee needs to abandon the asset. As a practical matter, unless the lawsuit is a slam dunk, the trustee will usually abandon the case and allow you to pursue it. However, since there are few, if any, exemptions that apply to lawsuits, the trustee has the right to take over the case.

As for the other issue...there is nothing wrong with this creditor pursuing you in court for the debt owed. The situation is no different than a divorce in that, if one spouse files for BK, the other spouse is liable for any joint debts. The creditor has equal right to pursue the other spouse for the debt. Likewise, since your business associates filed BK, the creditor has equal right to pursue you for the debt. Also, since this is a business debt, most of the "consumer" protections regarding the collection of debt do not apply.

However, clearly the issue is whether this creditor was fully compensated for the debt by sale of the collateral. (honestly, unless the debt is really small most collateral is generally not enough to satisfy most business loans, what you think these items are worth and what a creditor can actually sell them for are two different things). In any event, it does sound like something fishy is going on.

[SOTIRED]

Thank you for the reply. Your perspective is very informative.

The thing is ....I can not imagine that the collateral obtained to cover the original debt would not cover it and could not be proved especially since the major portion is actual property that they held 2nd mtg on. To be more specific...

The Original Promissory Note was for $112,000.00 before any legal fees.

Total listed on judgment is $130,000.00 (from legal fees which again could be argued that were not necessary since they received collateral prior to 95% of the legal process fees associated with the case)

They received the following:

• Deed in Lieu and took over 1st mortgage for 165,000. Property value on the conservative side due to the market at 300,000.00 (they are currently trying to sell property for 380,000 which is priced in line with other lake lots on the same road)...so equity of 135k right there with conservative view

• A dump truck valued in bankruptcy court of co debtor at 12,000.00

• 2 trailers valued at 4000.00 combined

[SOTIRED]

oops dbl post

[emoney]

One of the lasts things you want to do is to let the lender foreclose and sell the property. They do not want to do it and you pay the price for their in-efficency.
Once the time has passed to appeal a default judgment your avenues are closed!!!
Some courts will not let an attorney quit as your did and toss you to the wolves. This is what happened to you from your posts.
This is why, I believe, you have a claim against your attorney.
regards,
emoney