Judgment after discharge and protest of discharge

[jjim120]

As suggested, posting this to new thread. My husband and I have now been discharged from Chapter 7, but a creditor has filed a protest with the bankruptcy court. The protest seeks a judgment of over $700,000., primarily based on false allegations within a business deal that have never been proven and have never been adjudicated. Our bankruptcy attorney says we can fight it, but that it will be very costly.

We have been stripped of everything we own, are in the process of having our home foreclosed, and have nothing left but our social security checks, due to the actions of this creditor's attorney who was previously the foreclosure attorney for the bank that foreclosed on a business property in which we were minority partners. Since the bank was bought out with TARP funding, no attorney would take our case because they said, while we could win it, we could not collect any money due to the FDIC taking over the liabilities of the bank, and also because the only attorney who would have considered it says this foreclosure attorney, now representing the firm she sold the note to for a fraction of its value, and her husband have so much power and influence that he would never be able to practice again in that city if he sued her (his partner apparently was actually threatened if he took our case).

Does anyone have any advice for us in trying to stop this judgment against us? We barely have enough at this time for food, utilities and health insurance coverage. My husband is trying to find a job or consulting contract, but at age 69, even with his 50-year reputation as an honest, ethical Professional Engineer and commercial contractor, there is not much available for him.

[AbbeyA]

You received your discharge, this specific creditor never filed an AP against you and now they are trying to object to the discharge of the debt and seek judgment??? I am certainly no expert but if they didn't file an AP, I thought they were SOL. I hope some of the experts can chime in here.

jjim, I remember your case, yours was a more extreme version of our situation with my dh's business. I'm happy you found an attorney to work with you - did your son have to file too? I remember that you posted that he was involved with the business as well.

[AbbeyA]

Here's what I just found by doing a little search ...

Can the discharge be revoked?

A discharge can be revoked under certain circumstances. For instance, a trustee, creditor, or the United States trustee may request that the court revoke the debtor’s discharge in a chapter 7 case based on:

1) allegations that the debtor obtained the discharge fraudulently;

2) the debtor failed to disclose the fact that he or she acquired or became entitled to acquire property that would constitute property of the bankruptcy estate or;

3) the debtor committed one of several acts of impropriety described in section 727(a)(6) of the Bankruptcy Code.

Typically, a request to revoke the debtor’s discharge must be filed within one year after the granting of the discharge or, in some cases, before the date that the case is closed. It is up to the court to determine whether such allegations are true and, if so, to revoke the discharge.

In a chapter 13 case, if confirmation of a plan or the discharge is obtained through fraud, the court can revoke the order of confirmation or discharge.



So what are they claiming - are they still trying to bark up the "fraud" tree? Does it state that they are trying to revoke the discharge of their debt?

[despritfreya]

I will assume that the 523 complaint was timely filed.

You made a comment that your only current source of income is Social Security. Social Security is exempt, exempt, exempt. So, here is your food for thought:

If we allow this creditor to get a non-dischargeability judgment against us for $700K how can he collect. We have nothing, are not working, have no non-exempt assets and our only source of income is Social Security which cannot be garnished. So, should we defend or just say "good luck trying to collect"?

Now, if you have other income or plan on going back to work (as suggested in the post). . . well now the judgment may be worth something.

If you cannot afford to defend, can you afford some sort of settlement - a lesser amount and paid out over time?

Des.

[jjim120]

Thanks for the responses. This creditor's attorney appears to have a personal vendetta going on, and contested the bankruptcy from the beginning. The destruction of the businesses began with a partner's personal attorney (the partner could have stopped it, but he had given the attorney full control due to severe mental instability) who apparently had a deal with another person to buy the note on the project just as it was nearly finished, by forcing us out. That deal fell through because the apparent buyers were convicted of mortgage fraud and sentenced to prison terms, and apparently the money they were going to use did not exist once the FBI seized their assets. We believe that this attorney was in on the corrupt deal, and had to find another buyer, getting the underwriter for the bank to step up to cover up her involvement. During the process, my family members were accused falsely of a number of allegations, were put into bankruptcy by what apparently were allegations made directly from the foreclosure attorney to the construction company's bank and bonding company, causing the seizure of all construction company assets and equipment without proof or cause. By putting us into bankruptcy, they stopped us from being able to sue and from being heard in court.

It now appears that this creditor's attorney is trying to force my husband to "cooperate" with them and go after the construction company's insurance carriers for money, trying to drum up false accusations of construction defects on the project. The new owners of the project have done nothing to preserve it for over three years, though it was 85% complete, and had been appraised at over $28 million. My husband will not lie for her, but I fear that, if he does testify to get away from this judgment, she will use her wiles to twist questions to make it appear as she wants it to, not for truth. We seem to have no other options.

Someone just recently told me that usually these rich and powerful "a..holes" always win.

[chicagoannie]

I have zero advice for you, just my sympathy, for what that's worth. What a terrible situation. I hope you and your hubby can find a way out of this. It seems someone is out for blood.

[AngelinaCat]

Someone just recently told me that usually these rich and powerful "a..holes" always win.

No, they don't!!!

The Enemy we had for more than nine years--that drove us into BK and ill health--was struck down by Karma (his favorite word) on the Feast of All Fools, April 1, 2009, as he was posting his latest vile filth against us on the Internet. That resulted in a 10 hour open heart surgery, and complete loss of kidney function meaning he had to endure three days of dialysis every week. It also meant a loss of brain function, as he never posted again and had to have a power of attorney for his representative to handle his affairs.

When last seen, he was but a pale, drooling shadow of himself. Google the painting, 'The Scream', and you will see him.

He departed this earth this past October with few regrets from those who knew him.

[jjim120]

Thanks. Chicagoannie, probably not for blood, just for money, though the majority partner's attorney has apparently built up a fortune and nearly total control of the area he works in by these kinds of crooked deals over the several decades. I call what they are doing blackmail and corruption, but apparently when it is done through the legal system it is called making money through "billable hours on contingency." We just learned that they got a judge to rule that any lawsuits filed in the future cannot be heard by a jury -- didn't know that was even possible in our legal system.

[tcreegan]

Hi jjim120,

You might have answered this on the old thread, but was this creditor listed in the BK? And was an AP filed within 60 days after the 341?

If you suspect fraudulent activity by some attorneys, have you reported it to the State Bar Assoc ?

Sorry you have had to go through this mess, hopefully it gets straightened out...

Tom in Colo

[drowning123]

No, they don't!!!

The Enemy we had for more than nine years--that drove us into BK and ill health--was struck down by Karma (his favorite word) on the Feast of All Fools, April 1, 2009, as he was posting his latest vile filth against us on the Internet. That resulted in a 10 hour open heart surgery, and complete loss of kidney function meaning he had to endure three days of dialysis every week. It also meant a loss of brain function, as he never posted again and had to have a power of attorney for his representative to handle his affairs.

When last seen, he was but a pale, drooling shadow of himself. Google the painting, 'The Scream', and you will see him.

He departed this earth this past October with few regrets from those who knew him.

Dang, AC. Karma is a b. . . ., ain't she? LOL.

[jjim120]

Thanks for the response, tcreegan. Yes this creditor was listed. This creditor is the buyer of the note on the foreclosed property and is now being represented by the bank's foreclosure attorney (before the bank was sold) who sold him the note for pennies. They are the ones who have been harassing throughout the bankruptcy.
We now have even more indication of where this is going, as it appears that the purpose of the judgment they are trying to get will not necessarily be just against us personally, but the construction business, rather than our development company that owned 25% of the property. Apparently, since my husband stated that he would not "cooperate" by lying under oath, and since we have no money to fight with, the purpose of a default judgment is to prevent the construction company's insurer from being able to fight the false allegations that started the whole mess, and simply require them to pay up for any judgment. I think they know that if the whole story could be told in court they would lose, so they apparently intend to reduce the ability of the big insurer to deal with anything but a default judgment already made. Since we can't fight, and the insurer has their head in the sand, they get to name their judgment amount and then have the courts enforce it on the insurer. One of the dirtiest, most corrupt things I have ever seen, that has so far destroyed five businesses, seriously hurt ten more, bankrupted AT LEAST six individuals, caused the loss of more than 100 jobs, and left 3 people dead. All for no real reason except the promise of money and, possibly, a place for a mortgage fraud felon to hide money from the FBI.

[tcreegan]

Hi Jim,

Again, my sympathies on the rotten situation.

Speaking of the FBI, have you contacted them?

Might be an option to consider...

Tom in Colo

[AbbeyA]

I don't mean to sound heartless or not acknowledge all the people who have been negatively affected by this corrupt situation, at least the money can be recovered from the insurer and you and your dh will not be indebted forever to this creditor once the judgment is paid off. (Assuming the insurance company isn't in trouble and files bk to get rid of the judgment )

[jjim120]

Tom, Thanks.We tried, but there were two problems. One, we were told this was a state matter and the FBI would not deal with it in state. Two, we have no legal documentation of criminal activity since all this was done, primarily verbally, by lawyers who can claim attorney-client privilege and one who flatly states that the judge in the court that would hear it will do whatever he says, something that he has already proven by keeping an earlier issue from even being admitted.
A more likely scenario would be federal regulators investigating the bank, however, the bank has been sold to another bank, with the assistance of the US Treasury. There are similar lawsuits out there, but so far the courts have upheld the rights of the bank to act without cause. Discovery in the case was estimated by one attorney at $500,000-$1,000,000, which that attorney would have taken on half contingency until two things occurred: one, the bank attorney called his partner and told him to stop his partner from taking the case, "or else," and, two, he investigated the situation and said that, while he could win the case on principle, we would never be able to collect any judgment against the bank, so he declined the case.
As the bank's receiver said, "You all are getting screwed. There is nothing wrong with the project, and I can't figure out why the bank attorney is doing this." He acknowledged that the allegations the partner's attorney made were false, then said he would buy the note and finish the project myself, but I will probably have to testify at some point, so I can't.

[jjim120]

Tom, I'm not rejecting your suggestion of the FBI. Would love to see them come in to investigate. Just don't know how to get them to do it.
If there were some way to prove that the people who had claimed to be the "new owners" early in this scam and had hired the biglaw firm to represent them as such, I think they would be interested. If those people are who we suspect they are, the FBI just spent 11 years investigating them for mortgage fraud, and finally got convictions and sent several to jail. We think their deal to buy the note behind our backs may have been intended to hide the $25 million the FBI was looking for and never found. Since the deal never was completed when they were sentenced to federal prison, that left the partner's attorney and the bank attorney stuck trying to scramble to cover up their mess and try to find someone else to buy the note to hide their con game.