Great Question, Need Answers

[booboo]

AS you all know, we filed BK 7 back in 7/09. There has been a civil lawsuit against us for interest in a property located in Palm Springs Ca by a sibiling claiming that there was a constructive trust on this property and was not up to us to surrender this home in BK and that through his AP filing was going to try to have the home exempted because of fraud, etc.

Long story short, he filed his objections late, the AP was dismissed, but the Judge allowed him to file a amended complaint because during his filing he failed to include the Trustee. He filed his amended complaint, the Judge allowed his complaint, but noted that he does this without predudice because of our rights to procedural defect.

A hscheduling hearing will be scheduled and I would assume now that all parties were listed on this amended complaint, the same thing will happen, he will dismiss this case because of time limits missed.

Well yesterday, I got in the mail a notice from the trustee that all my creditors got a same letter notifing them that he has identified assesets over and beyond my legal exemptions and expects that a dividend will be paid to any and all calims filed. The only exemptions would be the Palm Springs 2nd home, to which we surrendered. The notice also noted that the assests were in or were going to be in his possession and that they had until 7-10-10 to file their claims.

So, since this family member has a pending civil action on this home against us for fraud and conversion, and the trustee took over 8 months to determine this excess asset, my guess is that he (trustee) feels that there is no legal standing for this family member and is going to take this home, boot him out and sell it., so if this happens and the issues were decided for him to sell this home, I guess he had reasons legally to find that this relative has no legal standing on the status of the house and pending litigation for the conversion and fraud and is going to take the house and sell it as part of our estate.

If he does this and boots this relative from the confines of this home, what happens to the leal status of the pending civil action in California? Does Fed trump State and could my defense be that they the Fed determined the issues that are now before the State District Court, of could he still sue? or has the Fed decision to take this home prove there was no fraud or conversion?

Also, would this relative now have to sue the Trustee in order to fight his confiscation the home, and not me?

All answers welcome, as this has been a 2 year nightmare. Also, the home is in our name, not in a trust, etc.

BooBoo

[spetkovich]

Equitable title for any interest in the CA property passed from you to the Trustee upon your BKC filing. Thus, if the putative owner of the home wants to recover title to the house, s/he would have to fight the trustee for it. S/he cannot recover title from you anymore; you are not a proper party to the suit... At least that would need to be your argument.

Whether you converted the property or committed any fraud is an issue of state law, and is not determinable by the BKC court. However, if you included the putative owner of the property as a creditor, collection of any damages due to a judgment for conversion and/or fraud would be barred by operation of the discharge.

Hope this helps.

[justbroke]

Exactly what spetkovich wrote. The Trustee smells blood (money) and is after it. When your relative failed to file in a timely manner, the Trustee "woke up out of a deep sleep" and smelled the money.

The Trustee must feel that there are now title issues or other ownership issues and your relative certainly helped the Trustee by serving his objection improperly. (The Trustee may have figured this out earlier had your relative served the Trustee.)

In the end, since you didn't claim the home as exempt, it is property of the Estate and hence is subject to administration by the Trustee.