Mother is dealing with an AP

[SecretOC]

Hey all, first post and really glad i found this forum.

Summary: So my mother filed for CH7 BK in March of 2014. But 2 creditors got together and decided to object to her BK. Since my mother was in a rush to stop the sale of her house she got a Bk attorney to quickly file for her. As time went by she would add a few things into her schedules and now these 2 creditors and calling her out on every little mistake that is in her schedules.

My father owned a business and my mother was the front desk secretary, but my father used her to do the notary and to cosign on substantial loans and what not. When the business went upside down my father fled the country. The major thing that these 2 creditors want and base their denial of a BK is that my mother cannot produce any records to the business. Would this cost her the AP?

If you have any questions please let me know

[LadyInTheRed]

Welcome to BKforum!

I don't know forum members are going to be able to be much help with this question because there are so many factors involved. But, it might be helpful to know more about the AP. Are the creditor's objecting to a Chap 7 discharge of all debts? Or, are they objecting to the discharge of their debts only? What are the grounds for their objections?

Has your mother told her attorney she cannot produce the documents and asked him/her about the consequences? If your father didn't leave records behind, might your mother be able to obtain bank records?

[SecretOC]

Thanks for the welcome!

The creditors are objecting to their debts and the discharge of all debts. They were just granted a PRIMA FACIE CASE today aswell. The grounds of their objections is about that she never reported an inheritance that they believe my mother had received but she had not at all and was never given to her because her brother took it ( who was an investor in her husbands company). Not to mention the fact that the inheritance occurred 10+ years ago. The other grounds are basic clerical errors and empty lie's such as "making many phone calls". But the foundation of their grounds would be the inheritance fraud+ receiving money from family members while she filed for BK and the clerical errors. They believe that receiving money from the family is actually her inheritance but it was to pay for the lease of her house. And that my mother co signed with my father to take out loans, she did it because she was afraid of him ( i dont know how far that would go in court).

I just read some more. The credtor asked for records of these loans and she has NOTHING. There was a storage unit that my uncle kept but was auctioned off due to not paid bills and apparently all the records were inside.

[despritfreya]

How much money is "owed" to the Plaintiffs?

Des.

[justbroke]

It's time for her to get with her attorney. Representation in an Adversary Procedure (AP) may cost some serious $$$. It is likely a $4,000 retainer (or more) is necessary. Don't let this go to a default and then summary judgement! She may or may not be able to find an attorney that will do this at a discount. Hopefully she has a competent attorney. If the attorney doesn't want to deal with the AP ask for a referral.

This can't be diagnosed or reviewed here on line. There's just too much information that would be included and it already sounds complex as you are casting doubt that it is "her" debt.

[SecretOC]

How much money is "owed" to the Plaintiffs?

Des.

Tthe loan is more than the creditors debt and It is a complete unrelated/different matter to their own debt yet they are bringing it up to deny the BK.

It's time for her to get with her attorney. Representation in an Adversary Procedure (AP) may cost some serious $$$. It is likely a $4,000 retainer (or more) is necessary. Don't let this go to a default and then summary judgement! She may or may not be able to find an attorney that will do this at a discount. Hopefully she has a competent attorney. If the attorney doesn't want to deal with the AP ask for a referral.

This can't be diagnosed or reviewed here on line. There's just too much information that would be included and it already sounds complex as you are casting doubt that it is "her" debt.

Yes, her attorney is filing an appeal for the order. The judge granted the order as a PRIMA FACIE case. But still, there is no "materiality" showing what happened with that money or where it went.

As for me casting doubt to my mother, being responsible for the loans/records, i was relieved to hear from the attorney saying that the judge agreed with him stating according to cultural values that the husband takes care of everything (to say the least).

[justbroke]

Des is asking about the amount because it may be cheaper to allow a settlement. If the amount is less than an average Adversary Proceeding (AP) retainer, and it is questionable as to whether you will prevail, then the settlement for something less than the average AP retainer may be in the best interest.

Or, I'm totally wrong which is quite possible.

[despritfreya]

JB is correct. The Plaintiffs do not really care about the other creditors or the granting of a general discharge (assuming the trustee has not joined the AP). The 727 portion of the complaint was thrown in as "icing on the cake". It is the 523 portion of the complaint that the Plaintiffs really care about. So, how much do the Plaintiffs assert is owed to them? Depending upon the amount settlement may be the way to go.

Des.

[SecretOC]

About less than a million. Yea there would be no way they would settle, and their attorney is on a contingent.

[despritfreya]

About less than a million. Yea there would be no way they would settle, and their attorney is on a contingent.

Debtor needs a darn good bk litigation/settlement attny and, considering the dollars involved I agree with JB that any in depth analysis from this board would be impossible to give.

Suffice to say that the Plaintiffs need to understand that even if they win, collection of that large an amount is not going to happen. So, they may win the battle but ironically lose the war.

I do not know your mom's situation. What I can say is that in cases where we are dealing with such amounts, the client either is or will be judgment (collection) proof or has the ability to make a decent settlement proposal. Such a proposal could amount to stipulating to a large dollar judgment along with a covenant not to execute so long as certain payments (up to a smaller amount) are made.

Now, if your mom does not have the financial resources to settle, the issue becomes whether or not she is close to retirement age where her sole source of income will be SS. If she is close to this age and income status, who cares if a discharge is denied since SS is not subject to garnishment and she would, therefore be, judgment proof? So, the next questions would be. . .

How old is mom?
What are her sources of income?

Des.

[SecretOC]

Thank you des, i understand now. My mother is 53 and works as a substitute teacher. But can you give me an example of a prima facie case in bk? I have read many definitions but it just confuses me as to how they are granted the order of prima facie case.

[despritfreya]

can you give me an example of a prima facie case in bk? I have read many definitions but it just confuses me as to how they are granted the order of prima facie case.

Unfortunately I cannot.

It appears local procedure requires the Plaintiffs to show that they have alleged facts sufficient to show that the actions of your mom, if true, supports their argument that she should be denied a discharge, and therefore they will prevail. For example - Is there sufficient evidence that mom failed to disclose, disclose, disclose as it relates to her bk schedules.

Edt to add. . . once they show she failed to disclose, disclose, disclose, the burden of proof shifts to her to defend why she failed to disclose, disclose, disclose.

In my district, the only time one must initially show a prima facie case is in defense to a motion to dismiss for failure to state a claim upon which relief can be granted.

Des.

[SecretOC]

Ok understood. So anyone can basically say "I have all this that can be used as evidence" and the court would grant them a prima facie case, correct? If this attorney can prove it, even we would be amazed.

[justbroke]

It's not that simple SecretOC. They have to basically show that they could prevail if the facts, as stated, are true. You can't just make stuff up, so not "anyone" with no cause of action can get pass a hearing on a Motion to Dismiss.

[SecretOC]

It's not that simple SecretOC. They have to basically show that they could prevail if the facts, as stated, are true. You can't just make stuff up, so not "anyone" with no cause of action can get pass a hearing on a Motion to Dismiss.

Well, damn