Considering AP Against Landlord

[TurnThePage]

Just wondering if an Adversary Proceeding is the correct forum as a Debtor against someone who owes you money. For instance, let's say I'm filing a 13 and a family member who previously promised me money reneged on that promise -- instead of suing in state court, could I file an AP in Bankruptcy Court? And if successful in the AP, would these monies be distributed to the Trustee or the Unsecured Creditors?

[justbroke]

Why would you do that? The money would likely be property of the bankruptcy estate. If this is a Chapter 7 liquidation, it is the Trustees job to attempt to recoup the money. In a Chapter 13, there aren't many adversary proceedings and they cost $$$. So think about this... why would a debtor file an adversary to recover money in a Chapter 13 and spent $4,000 or more in attorney fees to attempt to collect on a bare promise?

Now, let's talk about a family promise to give you money. This is usually not an enforceable contract otherwise the court systems would be clogged with broken promises. There are ways in which it could be a valid enforceable contract but I'm not giving a legal conclusion or advice on this.

Besides, the process would likely be property of the estate, plus you wasted $$$ to claw back money for the estate. If the Chapter 13 Trustee thinks that its worth going after a creditor, let them do it using the property of the bankruptcy estate since it is likely to only benefit the estate.

At least, that's my thought.

[TurnThePage]

Hi JB,

Well, the only cost effective way for a Debtor to initiate an AP is pro se. No attorney fees and a $0 filing fee if you're the Debtor. I was just thinking that the $5,000 gained could benefit or completely pay off the Unsecured or Priority Creditors -- but obviously it is not cost effective to hire an Attorney and pay $5,000 to gain $5,000. However, I realize the pitfalls of being pro se, and having to study the Federal Rules of Civil Procedure and Federal Rules of Bankruptcy Procedure.

One of the questions asked on a Petition is whether someone owes you money -- in which case, this may be counted as an asset or monies to pay Creditors.

Just wondering if the scope of an AP can go beyond declaring debts as Dischargeable or Nondischargeable.

[justbroke]

An AP in bankruptcy can cover anything for which the court would have jurisdiction. There have been APs that do everything from sanctions (I did two of these), to fighting ERISA and TIL mortgage cases, to recovering money for the bankruptcy estate. I'm just worried that it's a waste of time if even the Trustee doesn't want to do this. That is why you list amounts "owed to you" on the petition so that the Trustee can decide whether it is worth the time trying to recover the money.

As you wrote, an AP is a full-blown civil case with all the trimmings. You'll need to know the FRCP, FREV, and FRBP and hopefully be good with trial experience, if necessary. I don't know of any creditor that would go after $5,000 as that's just about the edge of where it's not economical... in case of a loss.

Bottom line, please don't worry about the unsecured creditors. That's the job of the Chapter 13 Trustee.

[TurnThePage]

Thanks, JB. Much appreciated -- your advice is invaluable.