Adversary Proceedings - creditor issue

[HHM]

When I file my proof of claim do I need to file all of the paperwork with it? The original UCC-1, the Summons and complaint and Judgment from the lawsuit, the Judgment lien and the property lien?

Also - do I need to file a formal complaint to file a Motion to Life the Automatic Stay or do I already have standing since I am a named creditor?

Yes, you need to supply "proof" of the claim. I can't tell you how many claims get objected too and disallowed because the creditor did not file supporting documentation. You would need to file the Original signed contract, the UCC-1, and the Judgment.

Assuming you really are a secured creditor, you have standing to file a motion to lift stay.

[AngelinaCatHub]

may i ask what kind of civil suit is it? that they would claim fraud on?

i have someone who will probably fight my bk for a ongoing civil suit for "breach of contract" for not completing 1 year of a employment contract.

[JanetW]

Adversary Proceeding

My civil suit arose after Defendants, who have both a for-profit and a non-profit company, induced me to advance $30,000 to purchase a hyperbaric chamber. Once they had the chamber in their posession, they terminated me (I was a private contractor in their clinic), and appropriated the chamber.

I sued (and won a judgment) in Superior Court, awarding me my original investment, costs and sanctions against them. This is far from an "open" case.

I was able to talk to the Trustee, who indicated that based on the material I had provided that he would not oppose a motion to lift the automatic stay.

1. What do I do after I file the motion? How do I collect the equipment?

2. Is it worth my filing the Adversary Proceeding? This is the only asset in the BK.

3. How much will it cost a debtor to defend against an AP?

[HHM]

1. To get back the chamber, once the stay is lifted, your next stop is back in Superior Court to get an Order of Replevin (which frankly, you should have done as soon as you got the judgment--heck, you can sometimes get those writs before the case is even over, but live and learn).

2. Probably not, unless..as we have REPEATEDLY ASKED, the judgment actually contains a finding of fraud (why you haven't answered that question, I don't know).

3. An answer to the AP can usually be done fairly easily (or cheaply), so the odds of getting a simple default are slim.

[dingdong]

1. To get back the chamber, once the stay is lifted, your next stop is back in Superior Court to get an Order of Replevin (which frankly, you should have done as soon as you got the judgment--heck, you can sometimes get those writs before the case is even over, but live and learn).

2. Probably not, unless..as we have REPEATEDLY ASKED, the judgment actually contains a finding of fraud (why you haven't answered that question, I don't know).

3. An answer to the AP can usually be done fairly easily (or cheaply), so the odds of getting a simple default are slim.

HHM, I believe she did address the fraud issue in an earlier part of this thread.

"They engaged in a bit of legal chicanery - attempting to change the venue, abuses of discovery, etc. I sought and got sanctions against them, then terminating sanctions. Their attorney deserted ship and I prevailed. I was awarded the original amount, interest plus fees and costs.


However, I did not seek a finding of fraud, so my judgment did not address it."

Just for a little clarification.

[JanetW]

Adversary Proceeding

I spoke to the Trustee who said that he would not oppose a Motion for Relief of the Automatic Stay and indicated that I could then pursue whatever remedy I was entitled by my state court Judgment.

So I am planning on doing this. Since there are 2 related BKs do I file a motion in each one? Do I incurr duplicate filing fees?

I am also curious about the Order. Should I prepare a Default Order?

The Trustee also told me that if I wanted to pursue the AP I would need to go back to the Judge in the previous civil suit, amend my complaint to include a cause of action for fraud and ask for an expedited hearing.

Since the deadline to oppose the discharge is February 17, how can I do this (and get it heard) before filing the Adversary Proceeding?

Thanks again for helping with this. It has been challenging.

Janet

[NewDawn]

I don't understand why these people don't just surrender the chamber back to you if they can't or won't pay it. That's just insane. I'm just a lay person, but I would follow HHM's advice. He's very knowledgeable and really knows his stuff. File your motion to lift the stay, then get that Writ of Replevin from the court where you were awarded your judgment as soon as you can. Also, file the proof of claim with all the supporting documentation to cover your bases with the bankruptcy court.

I don't know how long it will take to get an adversary proceeding going and heard. My gut tells me it would take longer than you have. Maybe you can call the court to get an idea on time frames to be absolutely sure. Even if you had your case heard on the action for fraud, wouldn't you still need to collect on the judgment? I think your first judgment award for breach of contract already entitles you to collect or in your case take back the property. You're ultimately trying to get the chamber back, right? I think the Writ of Replevin will accomplish this and I think could be done quicker, again, from my layman's perspective. From what I read, you might have to post an indemnity bond to cover the U.S. Marshal's out-of-pocket expenses in serving the writ.

If I am wrong, I'm sure someone else will chime in and correct me.

[NewDawn]

Another thought occurred to me. Couldn't you contact the U.S. Trustee's office and reference the two case numbers and inform them that the bankruptcy filings themselves could be considered fraud due to material misrepresentation in their schedules? They darn well knew this was a secured asset, yet it was a deliberate intention to misrepresent the facts in their schedules. If that isn't bankruptcy fraud, I don't know what is. Remember, they are signing their petition and schedules under penalty of perjury.

I really think this is at least worth the phone call to see what you can find out. Send the U.S. Trustee's office all supporting documentation. I would certainly hope that since you're the only creditor listed and it's proven to a secured loan, that their bankruptcy will be dismissed or at the very least they would be required to amend their schedules to reflect the true nature of the debt along with a statement of intention. I hope the best for you.

[JanetW]

These are some excellent thoughts! However, I believe that the only remedy that the BK would do is to demand that they amend their pleadings to reflect that I am a secured creditor. (They also stated that the name of the "President" of the company was [last name][first name] instead of [first name][Last name], and I was assured that this was "innocent error" and not indicative of fraud.

I know that if I want to prevent the discharge I will need to go back to the court, so I might as well as for the order of Replevins at the same time.

This is all soooo frustrating for me. As a result of this theft, I don't have the money to heat my house this winter, don't have the money to go to school to re-train, and can barely afford food and medicines. I have spent far too much time, money, effort and aggrevation than I can really afford. I certainly can't afford the $20,000 that an attorney wanted to help me handle this.

[Dst1]

"(They also stated that the name of the "President" of the company was [last name][first name] instead of [first name][Last name], and I was assured that this was "innocent error" and not indicative of fraud."

Who said this? I'd be surprised if it was a Trustee. The 10th Circuit held in United States v. Beach (10th Cir. Apr. 9, 2007) that the simple reversal of a social security number was not "innocent error". True, this is not the SS# but the name but I think the logic still applies. You could also see Sholdra v. Chilmark Financial LLP (5th Cir. 2001) ruling that for innocent error to apply the debtor himself had to bring the error to the court's attention. It both cases the BK petition was dismissed for fraud.

If he signed his name wrong, and failed to bring that to the court's attention, you at least have a arguement that the error was not innocent. I don't know if that argument would carry the day win but you certainly are not crazy to think it's fraud.

[JanetW]

This is good stuff. I can also show a pattern here. In attempting to evade service on the Superior Court complaint (Personal service required), debtor stated to the Sheriff attempting to serve the complaint, that the name on the complaint was his son's name, not his. I had to prove to the Sheriff's office that his name was the one on the complaint. I then had to spend additional money to get him served.

Similarly, at the onset of our relationship, debtor misrepresented his credentials, misrepresented his ability to repay the debt, and (certainly) misrepresented his willingness to repay the debt. He made sure that all I had was verbal, nothing in writing. He put me off with one excuse after another (he had to contact his attorney, then he had to contact his accountant, then he had to contact his board). Meanwhile, I had to pay for the chamber or lose it, and he begged me to send a check, saying that the paperwork would be in the mail.

I am in the process of writing my motion for relief from the automatic stay and abandonment of property. I am not sure how much detail to provide. Do I discuss the facts above? Do I discuss the reason that I do not have a Note is that they did not sign one and I had to seek a judgment in Superior Court?

Also are my basis 11 USC 362(d) and 554?

I have listed as my basis that creditor's interest is not being adequately protected in the Debtor has no equity in the property, has no insurance, and the property is burdensome to the state and is of inconsequential value and benefit to the estate.

[NewDawn]

I think you're on the right track by filing your motion for relief from stay. Definitely include the fact that the debtors don't have the property insured and that they have no equity. I would make as much information, facts, and documentation available as possible. I honestly don't know which law you can cite for your basis.

As far as abandoning property, maybe I'm misunderstanding what you're trying to accomplish. I thought abandonment of property was a motion that the Chapter 7 "case" trustee would file, meaning it's not worth their time to try to take the property, store it, sell it at auction and then liquidate to the unsecured creditors. You're not trying to abandon the property back to the debtor, are you, without any further payment? Since you a secured creditor and you have a valid lien against the property, I honestly didn't think the case trustee had any right to abandon it.

I still stay if you contact the U.S. Trustee and provide ALL documentation to prove that you a secured creditor, the debtors will have no choice but to amend their schedules to reflect that you are, indeed, a secured creditor. Consequently, they will also have to file their statement of intention, which only gives them three choices, reaffirm payments, surrender the property, or redeem the property at its current value. Somehow my gut is telling me that when confronted with this scenario, the debtors might not file anything further and the case could possibly be dismissed. Let's face it. They filed hoping they could just sweep everything under the rug and not have to be made accountable for this debt. They were hoping they could have their cake (keep the property) and eat it too (not have to pay for it).

The debtor is supposed to file a statement of intention in regards to secured property within 30 days of filing their petition or the date of their 341 meeting, whichever date is earlier. They also have 45 days from filing their statement of intention to implement their intent, surrendering, reaffirming or redeeming.

[justbroke]

I'm tired, but you could write a motion to compel abandonment. This basically asks the court to order the respondent to abandon the property. However, a motion for relief from stay would allow you to proceed in non-bankruptcy court and get a judgment, so I don't know if you need to compel abandonment.

[JanetW]

Adversary Proceedings - The outcome

Thank you for all of your wonderful ideas and suggestions. Here's what happened -

I wrote a long letter to both Trustees trying to make my case that the debt was secure. They apparently have difficulty reading and writing, because they didn't know (or believe) that my UCC1 was valid. It turns out that they were only familiar with UCC1s that had been paper filed and mine had been filed electronically, and neither of them could be bothered to look it up on the Secretary of State's website.

I tendered my motion to lift the automatic stay, while continuing in dialogue as to why they didn't consider the claim secured (obviously they weren't going to tell me that they didn't look it up). I finally wormed the truth out of one of the Trustee's assistants and begged her to look it up on the web. She finally did, then called me right back and notified me that the Trustee would not oppose my motion to life the stay.

Meanwhile, the other Trustee offered to sell me my chamber for $10,000, or that he would sell it to another "interested party" for $10,000. I countered that it was not his to sell, as it was not a declared asset in his BK (it was listed in the other BK). We went over debtor's schedule B line by line and the Trustee backed off.

The time for filing an objection to lifting the stay has come and gone. I have made arrangements to reposess my chamber on the basis of lack of equity, no insurance, imminent danger of damage to the property, nuisance to the estate, and unnecessary for any possible re-organization.

Looks like at long last I may have one this round. Thank you all for your encouragement, wisdom and advice.

Janet

[fltoo]

Good job.