Bankruptcy NIGHTMARE

[Tallulah]

I geniunely hope someone can help me.

I filed for Chapter 7 in June 2005. My lawyer stated that if the Chapter 7 "didn't fly" we'd simply convert it to a Chapter 13. Well, the 7 "didn't fly" as I thought it wouldn't. I had equity in my home and in a bar business which I still owned and operated with my ex-husband. I received a letter from my attorney telling me to go find another attorney since she said she didn't handle 13's.

A trustee was appointed to my case. The lawyer for the trustee ejected me from my business. So, I had NO income and was expected to get a job AND continue paying on my mortgage.

My home is up for sale. My business is up for sale. The trustee has 30 days left to sell my home before the bank forecloses on it. My lawyer backed out of my case because this bankruptcy has made such a mess of my life. I have not been able to pay my mortgage even though HALF of my mortgage is business debt. My X is supposed to give me any "profits" from our business but I will NEVER see a dime, of course. I am unable to enforce the divorce decree, which my X has been in default of from the onset because bankruptcy is federal court which supercedes state courts.

I'm going from bankruptcy to poverty. I don't know what my rights are. I feel my civil rights are being violated by this bankruptcy trustee lawyer. He called me today and was threatening me. I asked him "how much" it would take to pay him off. He uttered a ridiculous amount. The proof of claims filed was only $30K. He's asking for $100K.

I went to an attorney last month and he took one look at my case, shook his head and said, "This is malpractice. She did a SLOPPY job." He then told me my only recourse was to sue my former attorney for malpractice. I have given my documents to another lawyer to see about filing a suit against her.

Thanks in advance.

Tallulah

[sol1899]

Your house should be protected by the automatic stay. If there is equity in your house to cover your exemptions and to pay creditors and the especially the trustee the court will not allow a relief of stay.

I found a lender that will finance me during my Chapter 7 and pay off the trustee. My trustee has not yet told me what the payoff would be, but you are scaring me with the 100k quote. I know I have several duplicate claims so you might have some duplicate claims that make the trustee assume that you owe more. And don't forget the trustee's commision.

[Tallulah]

Thanks, Sol.

The lawyer for the trustee has discharged my bankruptcy as of April 10, 2006. He agreed to discharge it if I turned over tax refunds that I was expecting. I turned over the refunds I received but did not receive all of them since the state had subsequently denied some of the refunds. It was written in his withdrawal of his objection to my bankruptcy that any taxes withheld to offset unpaid taxes meant he, of course, wouldn't receive that money. I have sent him documents from the state showing what the state denied or withheld but he acts like I am just being uncooperative, that I am deliberately refusing to give him money I DIDN'T GET.

In March, the bank took me to court since they were trying to get a lift from stay. At the same time, the lawyer for the trustee (LT) was asking the court to allow him to evict me from my home. The judge granted the LT 90 days to sell my home (homes are NOT selling in Michigan) and after 90 days, the bank can begin foreclosure proceedings. The LT tried to get me evicted stating that I was uncooperative. My lawyer had sent her colleague in her place (as she did the first time I went to BK court) and he was not doing much to defend me. I stood up and spoke. I explained to the judge that I was waiting for a response from my attorney (who at this point refused to return my calls and would not answer my questions that I asked in letters to her). That I needed to know from her if the bank was going to get the stay lifted (something that the LT said was imminent) and if it was, what was the point in listing it with a realtor. The judge accepted my explanation and understood that this was NOT about me being uncooperative. He ordered my attorney to refund HALF of my legal fees. She then filed to be allowed to withdraw from my case. I went to court asking that she not be allowed to withdraw since I could not afford another attorney. She was allowed to withdraw, (which I knew she would be), and now I am without counsel. Surprisingly, the LT showed up in court with her that day!!!! The withdrawal had nothing to do with him. Why was he there? It's all just so creepy. By the way, he did threaten my lawyer saying that if I converted to a 13, he would come after HER for his attorney fees. She ran from my case. It is such a mess. I am left floundering.

The LT called me yesterday with his realtor on conference call. They are nitpicking every single thing I do in my own home. If I correct one thing they object to, they find another thing to gripe about. It is ENDLESS. And it's all superficial stuff that any potential buyer would not care about. (Egs.: Laundry in the bathtub that my son left, everything and anything they can find "unacceptable" they focus on. I correct it, they find something else.) Bottom line is that they are afraid that the bank will take my home, which is exactly what will happen. The bank is first in line. My house is beautiful but it needs paint, it needs new windows, the floor needs to be redone, the carpet is old. These are things that, of course, I don't have the money to fix. And, of course, I couldn't maintain the mortgage after the LT ejected me from my business. I had NO income when he did that. My livelihood was gone. Everything I filed bankruptcy on was BUSINESS debt that my X husband incurred. My attorney even listed the business taxes as my personal income tax debt! It's SO screwed up. My only recourse is to sue my lawyer, which is why she "ran away" just after my 7 "didn't fly". She abandoned me because she knows she put me in the very position I was trying to avoid by filing bankruptcy. I should've never filed.

The LT said that he was going to send the realtor and the trustee to my house on Monday for inspection. I told him to please come, too, so that he could point out to me what he wanted done.

I had requested from my lawyer a copy of the proof of claims. She said she'd send it to me. She never did. I requested it from her several times. She continued to ignore my request. I finally got a copy of it from another lawyer. She said that the proof of claims filed on the unsecured debt was $30K. The secured debt was $20K but the 20K is BUSINESS debt! I asked her what it would take to get rid of this LT. She said that if she were him, she'd ask for $40K. So this $100K is something that is over and above what I even filed bankruptcy on. I know he's just trying to bully and scare me. But do I have ANY rights? It appears not.

My X is running our cash (bar) business right now. I filed for divorce in 2003. I was afraid that he was going to leave me with all the debt while keeping our cash business. After a long battle in divorce court, and then the subsequent battle that ensued post divorce, I am back at square one.

Could I possibly get another mortgage now? The bar business is difficult to sell. The road commission is doing work on the road in front of our building and they have closed off access to our business on one side. If the bar closes, it can't be reopened since it is grandfathered in as commercial but is on residential property. It could only be sold as residential if the bar closes. However, due to the square footage of the property, there couldn't even be a home built on the property. The property would be worthless if the business closes. So, the LT knows that selling it is going to be a real problem. That's why he subsequently went after my home.

We had a buyer for the bar around the time the LT ejected me from the business. He told me I could keep my house and that I would end up with X amount of dollars. Well, he wouldn't write up a satisfactory purchase agreement for the buyers. He wanted them to put down $35K that would be non-refundable if EITHER of us pulled out of the sale/purchase. Of course, the buyers told him to stick it.

This is just MADNESS. When I first consulted with my lawyer, she told me that we could file because my name wasn't on the business liquor license. I was concerned about my 80 year old mother's home which has mine and my sister's name on it, too. She said that we could just say that I never paid anything on my mother's home, hence it wouldn't be an issue. Both were lies. She explained NOTHING to me about bankruptcy. I had no idea what I was getting into until I went to court. She didn't even show up in court with me. She sent her colleague.

I'm sorry this is so long and convoluted. Thank you so much for your response. I do know that the LT asking for $100K is just ridiculous. I really don't think there's much I can do but to wait to lose everything I worked my whole life for. My X was/is abusive and it's been a nightmare just trying to get away from him.

Thanks again.

Tallulah

[LostOne0069]

Wow, I feel for you, I really do.

Unfortunately I don't know that I have any worthwhile advice for you. It really does look like all you can do is sue your attorney for malpractice. On the "bright" side... It looks like you'd have a REALLY good case for suing your attorney. Just the fact that the judge ordered them to give back half the attorney fee is a good sign of that IMHO.

What you might try doing is sitting down with all the paperwork and a notepad and write down everything that you understand about the current status of your case and how you got there. Get it as orginized as possible. This could help in many ways... first, it'll give you what your new attorney (for the malpractice suit) the information that they need. Second, you could then contact the trustee and see if you can go over it with them... see if they'll take the time to try and explain what THEY see as the current situation and how you got there and see if they will make any suggestions on how to proceed since you now do not have legal representation.... they may not, but the worst they can do is say "no" and then you're no worse off than you are now.

The other thing you can do with this information is try and talk with a new attorney... see if they'll help you with the rest of the bk as well as handle the malpractice suit. If you can find the right one, they may accept a contingency fee agreement and help you with no money out of your pocket for both issues.

[Tallulah]

Thank you, LO!

I did go to another BK attorney and he was absolutely wonderful. He and his associate sat down with me for TWO hours going over my case. He shook his head and said, "This is malpractice." He pointed out all the screwy things she did on my BK petition. The attorney said that I could hire him but that there really wasn't much he could do for me at this point other than sue my former lawyer. I asked him if he knew of any attorneys that sue other lawyers and he referred me to someone. I spoke with the MP attorney and he told me to drop off all my paperwork, which I did. I'm still waiting to hear back from him. Needless to say, the reason my original attorney never answered my letters, returned my calls OR showed up in court for me was because she knew she messed up big time. I didn't even know that I couldn't drop the BK. She explained NOTHING to me. She really had me believing that all would be well and that I would be under a "protective bubble". She didn't tell me that Chapter 7 would expose ALL of my property. This was the very thing I was trying to avoid.

Running the bar with my X was a feat in itself. He would "run away" leaving me to handle everything. I couldn't get him to cooperate or find a solution. He thought I would just magically come up with money since that was something that I did year after year when he got us in one financial quagmire after another. But I had CREDIT back then. Once he maxed out my credit (to buy and remodel another bar that subsequently failed) our marriage fell apart. This began in 1998 and I've been struggling to find a way out ever since. I thought that filing BK would give me a fresh start. All it did was reduce me from bankruptcy to poverty. My former attorney knows this and that is why she ran off from the onset. After all my X had put me through, she finished me.

I'm trying to negotiate something with the LT but I fear it's futile. But if the bar can't be sold and the house can't be sold, he will end up with nothing too. In the meantime, my X has full run of the business, just as he did when he kept me out of our business once our marriage started falling apart.

All of my worst fears have become reality. On the other hand, I am able to focus on starting my life over without my X. He was a financial runaway train. But then, this has happened to SO many women. My X owned 6 bar businesses through the course of our marriage. He lost them all with the exception of the last one I tried so desperately to hang onto. My X is 65 years old, 20 years older than me. We have three children.

Thanks again! I'll keep you updated. Perhaps someone else can learn from my nightmare.

Tallulah

[LostOne0069]

Good luck with everything, I hope that your MP attorney gets you a decent settlement.

One thing I don't understand about your situation is how and why the trustee "kicked you out" of your business. I mean, I don't see how they could legally do this. That would be like them saying you can't keep your current job, you have to get a different one. I must be missing something here.

[Tallulah]

Good luck with everything, I hope that your MP attorney gets you a decent settlement.

One thing I don't understand about your situation is how and why the trustee "kicked you out" of your business. I mean, I don't see how they could legally do this. That would be like them saying you can't keep your current job, you have to get a different one. I must be missing something here.

Ya got me on that one, too, LO. The LT took me to court to try to evict me from my home. He was denied his request. So, I wondered, if he had to take me to court to evict me from my home, didn't he have to take me to court to eject me from my business? I really don't know what my rights are. It seems like the only one who has helped me has been the judge. When I met with the LT with my lawyer, she just sat there agreeing with everything he said while I sat there trying to defend myself against ridiculous accusations he was throwing at me. I was utterly in tears. I ~agreed~ to leave the business in my X's charge because my X was not cooperating in helping me run the place. I was running myself ragged while trying to pay all the bills plus trying to scrape a living from what tips I made bartending. I found myself taking child support money AND my tip money just to keep the bar afloat. I was a basketcase. My X would not answer my calls and refused to even discuss the dire straits our business was in at that time.

The road commission had begun work in September 2005 and our business was choked off at BOTH ends of our property as well as detour signs posted on both ends of the main road. Hence, we had virtually no "through" traffic. To make matters worse, the cops were pulling people over who "passed through". I went to the cops to complain about this since the road WAS open to the two local businesses (us and a party store). They pulled cars over randomly and ticketed people right and left. I asked the cops HOW they determined who was just passing through and who was a patron of the businesses. The cop couldn't answer me. I mean, if you're pulled over and you just came from my bar, are you gonna tell a cop you were at my bar drinking to avoid a traffic violation? Pffffffft. Hardly! My god, it was just awful.

Then, when the LT decided he wanted to eject me from the business, he accused me of "embezzling" and "drinking" and stated that the business was being misrun under my "management" which was all a crock of malarky. The road was closed. I sunk every last penny of my own money into the business to keep it going. But the LT just wanted to make excuses to do whatever he wanted to do. So, I gladly agreed to let my X run it. Now it is up to him to keep the doors open and the wolves at bay.

However, in the divorce decree I agreed to maintain the mortgage but that was based on having the business income. The home mortgage is 50% bar debt. We took out a second mortgage in 1989 to buy the business. The business had been making payments towards our home mortgage for 16 years. But, during the divorce I had forgotten that the mortgage was partially bar debt. And since my X wasn't ordered to pay any of it, it was up to me to "find a job" and keep it current. I couldn't. Also, I was supposed to get 50% of any profits from the business while my X continued to operate it. Of course, I've not received a dime and, of course, never will. My X has made sure of that. The LT isn't running the bar with him. I'm back in the same position I was prior to divorce. My X is the only one who can save us now. Jeez, I am SO up a creek.

Thanks again for responding to my post. It helps just to vent.

Tallulah

[Jhbk29]

Your story sounds very similar to ours... We converted to a chapter 13 and have a different lawyer now because our lawyer totally backed out after screwing up as well... We had equity in the house but the lawyer said we would have no problem because he didn't realize that parts of the new law took effect april 2005 and the rest oct 2005! We are still waiting to find out what is going on because the Trustee wants us converted back to a 7. I know how you feel because we are soo frustrated and confused here. We tried to get an equity line on the house to pay the bills but since our first mortgage is a private one they wouldn't do a mortgage behind that. Come to find out that the private mortgage never got put on the house (the lien) so we could have gotten the equity line and been done with this @@@@@@@@@ GOOD LUCK with everything and keep us updated!!

[Tallulah]

Jhbk,

Yes, does sound similar. When my lawyer learned that my Ch7 "didn't fly", she wrote me a letter telling me to get a new lawyer to convert it for me. I called her office and her secretary told me that my lawyer "didn't handle 13's". I was livid. The secretary then referred me to another lawyer who happened to be the SAME lawyer I consulted with several years earlier about bankruptcy. I went to him and he told me the grim reality of the situation. Told me I could convert to a 13 but that I would have make payments and PROVE I could make them. Since I hadn't taken a paycheck from our business in years, there was no way I could prove an income. (Prior, during and post divorce I had been living hand to mouth while my X controlled the cash business.) He told me, as he did years prior, that I should NEVER have filed BK.



The LT was really worried that I was going to convert to a 13. He told me he'd fight to have me dragged back into a 7. What infuriates me is that my lawyer never told me ONE thing about the harsh realities and RISKS of filing BK. I was trying to protect my BUSINESS. ARGH!!!!