Possible illegal suit? Got a question

[ChrisAFguy]

Hello all,

I filed bankruptcy on 12/27/10 and had my 341 meeting on 2/03/11. I figured I would be all good, and so far I have, but I got a letter from the court today in the mail.

"On March 07, 2011 the District Court of Maryland entered an Affidavit Judgement in favor of the Plaintiff in the case named above. The defendant has until April 06, 2011 to file a motion to vacate judgement, stating a legal and factual basis for a defense. The Court awarded:"

It goes on to list the amounts and interest and whatnot. My question I suppose is is this lawsuit even legal since it seems like the collection agency ignored the bankruptcy when proceding with the court, or is it something I should just hand over to my attorney and let him handle?

[OhioFiler]

Was this case listed on Schedule 7 as a current lawsuit? Was the creditor listed on your creditor matrix?

[justbroke]

Yes, was it listed in your Statement of Financial Affairs and the creditor listed on your Schedules? This is a simple violation of the automatic stay. You can file a suggestion of bankruptcy, or other procedural paper for your area, to that court. I'd also send a certified letter to the creditor with a copy of the Notice of Bankruptcy and warn them that they are in violation of the automatic stay and that they need to vacate that judgment or face sanctions in the Bankruptcy Court.

Give them a "short" timeline to comply (14 days). If they don't... POUNCE.

[Bell30656]

This is why you paid an attorney. The answer for the court is a copy of the CH7 petition.

[justbroke]

This is why you paid an attorney.

Not always. Most fee agreements for bankruptcy do not include any "appearance" in another matter. You could pay your attorney for this, but usually it would be a separate agreement. This is mainly due to the way the Bankruptcy court establishes "no look" fees for Bankruptcy cases, to insure that attorneys don't overcharge the debtors.

You will find that almost all bankruptcy attorney free agreements, do not include "representation" in an outside matter. Sure, they'll take a call to run interference with collections, but most will not go beyond a courtesy "phone call" in another matter.

In the end, this service may or may not have been paid for in the bankruptcy; in most cases, it isn't included. I do wish it was the case and that these agreements were more "universal" and inclusive.

[Charlie777]

justbroke is right, proceeding with the suit and entering a judgement violate the automatic stay, which is binding on both the creditor and the Maryland District Court. Your lawyer has undoubtedly seen this before, as the creditor will claim it was a "mistake" or they didn't get the notice. I would ask your attorney how to proceed, whether you can just send letters to the creditor and the court with the BK notice or he needs to be involved, and at what cost. You want to quash this as cleanly as possible, your attorney will know how that court reacts, etc.

It might also be as simple as your attorney having his secretary call the secretary for the lawyer suing you and faxing a copy of the notice.

I didn't have any lawsuits to deal with in my filing, but if you listed a lawsuit, I thought a copy of the notice would go to the Maryland Distrcict Court as well, as the stay is binding on the court.

[Bell30656]

My attorney must have been nicer than most. His agreement covered anything listed in the paperwork that he had me fill out initially. I had three pending civil suits. He dealt directly with the clerk of courts on all three (two different jurisdictions). He sent me copies. This matter that the OP is encountering could have been filed prior to his/her filing the bankruptcy and just run its way through the court.

[catleg]

This is a clear violation of the automatic stay. The plaintiff's attorneys should not have made any further motions in the case once advised of your bankruptcy. You should have your attorney write them a strongly worded letter saying fix this or else. The judgment must be vacated by the lower court.

If this case was actually filed after your BK filing you may choose to press this hard and turn it into an income opportunity also. There are probably FDCPA violations as well.

[Bell30656]

I'd be willing to bet the civil suit was actually filed before the creditor received notice of the bankruptcy filing as well as the motions. In some jurisdictions when you file the civil action you also include the motions for Default Judgement with the filing. If the respondent doesn't answer within the period the judge just signs off on the motion at the same time.

Since the OP hasn't included any additional information we can't determine quite a few factors. Was the CA listed in the matrix or just the OC? When was the civil suit filed? Was the OP served? Did the OP file an answer? Was the case listed on the CH7 filing?

It is easy for us to jump to conclusions that the CA just violated the heck out of the automatic stay. However, this is a very short window from filing date to judgement date. I'd be inclined to want more information. To violate the automatic stay, you have to know about the automatic stay.

[catleg]

True, but whether or not the creditor was notified, it is still a violation of the automatic stay, it may not warrant sanctions.
Given that the usual period to answer is 30-35 days I guessed it might have been filed after the BK case.
However unless the OP comes back we'll never know.