Mommy Blogger McKMama's Bankruptcy Problems

[Sweetpea3829]

Cat, if the particular creditor sues and receives a judgement, can the *judgement* itself be discharged in a future bankruptcy? In other words, is the future judgement itself separate from the debt they attempted to discharge during this bankruptcy, and thus liable to be discharged in a future bankruptcy. Or is the future judgement the same as the current debt, and therefore, never able to be discharged in any future bankruptcies.

And I totally agree about this stuff giving legitimate bankruptcy a bad name. You know...most of us wanted to pay our bills...and tried darn hard to do so. And whether due to our own financial mishandlings, or situations beyond our control, we couldn't pay our debts, and HAD to file bankruptcy. But filing just because you don't feel like paying your bills? Reprehensible.

[AngelinaCat]

I don't want to waste time and bandwidth by quoting the above, but in my opinion, there are some people that WILL abuse the system, no matter what.

Now, as to the questions, as I said before, I believe that the creditors are free to go after these debtor/deadbeats. And I hope they do. It is people like these that give the rest of us BK filers, the bad reputations, and the fear about filing.

[Sweetpea3829]

Yes, assuming the AP is now "resolved" and does not go to the "merits", the agreement to waive the discharge is the best result for these debtors. Creditors are free to pursue their claims at least for 1 year. If the debtors choose to file again (at least a year from now), they will be smarter in their disclosures. Now, had they come to this forum before they screwed up their case, they would have been properly educated on what to do. Presumably they have learned a lesson but learning it came at a price.

Des.

Nah. This is a person to whom rules do not apply. You have to understand, Des, this woman and her husband were not filing bankruptcy because they couldn't pay their bills. They were filing because they didn't want to pay their bills. We're talking about a couple that had a truck repossessed for nonpayment, while she was raking in the dough, hand over fist...and that was their SECOND vehicle to be repossessed.

I'm not sure, had they been honest with their income and asset disclosures, that they would have qualified for a BK7. Perhaps a 13...maybe. But a 7?

It's also interesting that, in the middle of the bankruptcy, the couple separated, with her taking the children and moving several hours away from him, and he, supposedly refusing to see the children for at least 6 months I think it was. Then, all of a sudden, just a few weeks ago...POOF! They're back together, happily married like nothing ever happened, traveling to Utah together on a Xyngular trip. After, of course, she secured ANOTHER home in a CFD arrangement.

I truly hope the trustee continues to pursue this case. The whole thing smells bad.

As for them re-filing...well, they do still have back taxes that were not included in the original filing. The most recent years, I think...as you can only include back taxes that are, what...three? years old? I suspect they may try again, down the road.

Now...quick question. One of the debts they attempted to have discharged was a 50k+ debt they owed to a previous employee (apparently, they couldn't afford to pay him, because they were...you know...too busy jetsetting to Africa, going on cruises, and buying a luxury home). That employee had not yet received a judgement against them, as they had filed bankruptcy shortly after he filed a lawsuit, but before the lawsuit had gone to court and been settled. I'm assuming he and his attorney will now proceed with that lawsuit and receive the judgement for the income these two owe him.

As that judgement had not yet been settled at the time of the original bankruptcy, would the debtors be able to include the future judgement if, and when, they file again in the future? Or is that future judgement protected from a future bankruptcy because they had already attempted to discharge the debt now?

[jange]

thanks Des, I'm glad I was reading it correctly. It didn't seem fair that they could commit fraud and they just get away with it and refile. It would have made the rest of us fear bk a whole lot less.

[despritfreya]

according the waiver, she can file again in 1 year, but cannot include any debt that was originally filed on.

You are correct. . . I was wrong. The language precluding a filing for 1 year threw me. But, a review of 11 USC 532 find 523(a)(10) which excepts from discharge any debt that was or could have been listed in a prior case in which the debtor waived the entry of a discharge.

So, taking back what I previously said, these folks are, in fact, screwed and based upon this correction, the only thing they did was save legal fees in having to defend the AP.

Des.

[jange]

I was reading on the the fraud files blog, by Tracey Coenen that according the waiver, she can file again in 1 year, but cannot include any debt that was originally filed on. She also posts a link to the waiver.

[jst4f]

Yes, assuming the AP is now "resolved" and does not go to the "merits", the agreement to waive the discharge is the best result for these debtors. Creditors are free to pursue their claims at least for 1 year. If the debtors choose to file again (at least a year from now), they will be smarter in their disclosures. Now, had they come to this forum before they screwed up their case, they would have been properly educated on what to do. Presumably they have learned a lesson but learning it came at a price.

Des.

[despritfreya]

Yes, assuming the AP is now "resolved" and does not go to the "merits", the agreement to waive the discharge is the best result for these debtors. Creditors are free to pursue their claims at least for 1 year. If the debtors choose to file again (at least a year from now), they will be smarter in their disclosures. Now, had they come to this forum before they screwed up their case, they would have been properly educated on what to do. Presumably they have learned a lesson but learning it came at a price.

Des.

[ValleYum]

Des? So she will be eligible to refile a BK with the debts from this BK after the year is up??

If this is the case, then she can let folks 25% garnish her for a year, fix the glitches so that she will cleanly qualify for a 7, then re-file adding anything new she chooses to.

It is much better than it could have been as it looks like all it will cost her (financially) is the few thousand dollars the Trustee found plus her domain name(s) auction winning bid amount(s) and her legal expenses. She already bought another Contract for Deed house.



FYI: MWOP has a new site address after 3 huge DDOS attacks on their old server: http://mckmamatruths.com/

[AngelinaCat]

The creditors can start their legal proceedings up again. Any that were in progress when they filed, were tolled until the case was discharged or dismissed. It has been dismissed, so no debt was discharged. the Automatic Stay is lifted, and the creditors can proceed just as they were, before the debtors filed.

[jst4f]

So what are their options now? Better yet what can the creditors do going forward?

[tobee43]

thanks des, really this is actually a very interesting case.

[despritfreya]

UPDATE for anyone following:

Debtors have agreed to waive their discharge and cannot re-file for at least 1 year. This is a win for them. If they were officially denied a discharge through the Adversary Proceeding, with findings of fact and conclusions of law by a judge, they would never have the chance of discharging the debt that was part of this bk in any subsequent bk. A trial in the AP is set for November 2, 2012 but, as the agreement/Order to waive the discharge was entered recently, I suspect the trial will be vacated.

Here is the Court Order:

UNITED STATES BANKRUPTCY COURT DISTRICT OF MINNESOTA
In re Israel R. McKinney Case No. 11-61215
Jennifer H. McKinney Chapter 7

ORDER

The application for approval of the waiver of the debtors’ discharge came before the court. Based on the application,

IT IS HEREBY ORDERED:

1. The debtors’ waiver of their chapter 7 discharge is approved.
2. The debtors, Israel R. McKinney and Jennifer H. McKinney, are not entitled to a discharge under 11 U.S.C. § 727 in this bankruptcy case.
3. The debtors, Israel R. McKinney and Jennifer H. McKinney, shall not file another bankruptcy petition for one year from the date of this order.

Dated: October 10, 2012

Dennis D. O’Brien
United States Bankruptcy Judge

Des.

[despritfreya]

So this is standard for all bankruptcies depending on local rules and procedures? It has nothing to do with the alleged fraud, etc.?

This is normal procedure for an Adversary Proceeding. A Complaint was filed against the debtors, alleging fraud etc. They answered the Complaint and the judge issued the Scheduling Order. Like any debtor, these debtors will defend their right to a discharge either by settling with the trustee or taking the issue to trial sometime after October 9th. In the mean time, the entry of the discharge will be delayed pending the outcome of this litigation.

Des.

[Sweetpea3829]

So this is standard for all bankruptcies depending on local rules and procedures? It has nothing to do with the alleged fraud, etc.?