Scribner's Error/ Illegal Foreclosure in Chapter 7.

[CEVIII]

Even if you can't help, thank you for reading this. I have been scouring Google for a month and I can't find any help or case law pertaining to my situation.


My mother filed Ch. 7 in Dec'07 to halt foreclosure with IndyMac. IndyMac and the law firm they hired in Chicago were notified electronically of the filing. In July of 2008, she received a notice from Cook County Chancery Court regarding her home, it came from the Circut Court; nothing was received from IndyMac's attorney either by her or her bankruptcy lawyer.

Before court, she called IndyMac's attorney's office and asked what this was about and to send her a copy of the filing. They refused.

IndyMac's lawyer corresponded with my mother's lawyer re: Ch 7 before the court date. When my mother went downtown without a lawyer to see what this was all about, the judge informed her that this was just a simple correction to a Scribner's Error on the title's property description and they are amending it so the sale can go through.

She then informed the judge that she was in Chapter 7, the judge was shocked ans asked IndyMac's attorney if he was aware of this and he looked the judge in the eye and said "no." IndyMac's attorney then wrote up a motion to dismiss.

The judge then informed my mother that if she hadn't appeared the sale of her home would have gone through

There is no court reporter in Cook County Chancery Court but there is a paper trail that he knew she was in Ch. 7 before he went to court.

My questions are:

Does this happen often, if so what are the penalties?

Is there any case law of this happening to anybody else?

Since this lawyer was working at the behest of IndyMac are they also liable?

What particular laws might have been broken?

We will be filing with the Illinois State Bar, the Illinois AG and federal agencies, has this happened to anybody else?

Please advise and thank you.

-C

[justbroke]

I have no clue. I'm not even sure if you have a case. Was the lawyer at the foreclosure hearing the actual lawyer -- not law firm -- of the plaintiff in the Chapter 7?

If your mother included the home in the Chapter 7 case -- surrendered it -- and it was subject to foreclosure because she wasn't paying... I don't see any issue? Chapter 7s do not halt foreclosure. They only postpone them. If you don't cure any arrears or reaffirm the debt, in a Chapter 7, the property is subject to foreclosure after the case closes.

What am I missing? Did you mother's Chapter 7 case close, if so when? Did she redeem, reaffirm, or surrender the property in the Chapter 7. Was her Chapter 7 case fully administered?

[HHM]

I agree, something is missing.

If she filed chapter 7 and was behind on her payments, and she had no way to make up the missed payments, foreclosure is a foregone conclusion.

[CEVIII]

It was the actual lawyer, not just the law firm. She was in automatic stay, she did not surrender the property. The bankruptcy was halted by her federal ruling and the lawyer was trying to move forward in state court.

[CEVIII]

At the time she was current, or at the most one payment behind. The lawyer laso pretended that he was never notified of the automatic stay.

[justbroke]

At the time she was current, or at the most one payment behind. The lawyer laso pretended that he was never notified of the automatic stay.

You state that she did not indicate, on her Statement of Intentions, that she was surrendering the property. Yet, she was, at most, one payment behind. Being behind on payments, even by a month, when filing a Chapter 7

Answer this question... did she indicate anything on her Statement of Intentions as to her disposition of the property and mortgage (Redeem or Surrender, Reaffirm)? If she indicated nothing, it's an automatic surrender. If she didn't redeem it, by paying the fair market value, it's an automatic surrender. If she took no steps to re-affirm the mortgage, then it's an automatic surrender.

The only thing that could probably save her was to do a "ride-through" if she was already current at the time of her Chapter 7. Even then, missing one single payment would have the lender in Court on a foreclosure, because the debt is discharged.

What is her payment status now? Is she current (paid up to date, not even a day late)? Was the mortgage discharged in the Chapter 7? What says the Discharge Order?

The lawyer pretending about an automatic stay, may just be that her Chapter 7 case is closed (fully administered) and there is no more automatic stay. When a Chapter 7 case closes, there's a permanent Discharge Injunction against those seeking an in personam case against the debtor (in personam meaning personally).

However, if she never redeemed or re-affirmed (with an approved re-affirmation of the Court), then my thoughts are that the case ic closed, that the mortgage was discharged, that there is no automatic stay (because that went away when the case closed), and the lawyer truthfully answered because there is no "automatic stay" in affect (11 USC 362)

The bankruptcy was halted by her federal ruling and the lawyer was trying to move forward in state court.

What exactly do you mean by this?

[CEVIII]

I have to find out the details from her but this is what I know:

She was in the automatic stay period when she appeared in court. Her Ch. 7 was a repayment plan with a trustee and she was current at the time. It was handled by a lawyer and was for the purpose of saving the house. The judge asked if the lawyer was awareof the bankruptcy. This was not a Motion From Relief of Stay in Federal Court, it was a Scribner's Error procedural appearance in state court. I will get the facts from her later tonight, but she was definitely in stay when this happened.

I will call her after work and get further details and post later tonight. Thank you for your help on this. This has been very rough on our family, thank you for your help.

[justbroke]

She was in the automatic stay period when she appeared in court. Her Ch. 7 was a repayment plan with a trustee and she was current at the time.

Ahh, you mean a Chapter 13 then!!!

It was handled by a lawyer and was for the purpose of saving the house. The judge asked if the lawyer was awareof the bankruptcy. This was not a Motion From Relief of Stay in Federal Court, it was a Scribner's Error procedural appearance in state court. I will get the facts from her later tonight, but she was definitely in stay when this happened.

Makes sense now that you trumped this non-bankruptcy court hearing with the Automatic Stay (11 USC 362).

So, if she's paying a Trustee under a repayment plan (Plan), she's probably in a Chapter 13 and not a Chapter 7. Yes, find out more.

[CEVIII]

I'm sorry, yes.

She was in Chapter 13 and was "active"

[CEVIII]

Also, a few months earlier she fell behind and this IndyMac lawyer sent a "Failure of Notice to Comply" to Federal Court. She caught up on her payments, and then he pulled this Scribner's Error a few months later.

[justbroke]

Also, a few months earlier she fell behind and this IndyMac lawyer sent a "Failure of Notice to Comply" to Federal Court. She caught up on her payments, and then he pulled this Scribner's Error a few months later.

Well, I think he was just stupid. I don't think he was actually filing a foreclosure action, but he was "getting his ducks lined up"... if I read everything correctly.

Even then, he is stayed from taking any act to play with an already recorded lien. I'm pretty sure that violates the Automatic Stay.

What her Chapter 13 lawyer needs to do, is to ask for an Entry of an Order to Show Cause and for Sanctions. Specifically for starting or continuing a State Court action against her.

Everything else you wrote, now makes sense. Chapter 13 is different from a Chapter 7, in that a Chapter 7 discharges comes quickly, and a Chapter 13 discharge takes years (under which you still have the Automatic Stay.)

[CEVIII]

My mom's lawyer is not very good. Can she file that on her own?

Thank you Justbroke, I will get more info later. This is the most help we've had yet.

[justbroke]

My mom's lawyer is not very good. Can she file that on her own?

If she filed by and through and attorney, she can only file papers with the court... by and through her attorney.

Wish you the best!

Who knows... maybe there is a Motion for Relief from Stay on file. You should help mom and find out what her attorney is doing and not doing. Let him know what happened.

[CEVIII]

Willful violations of the automatic stay are a no-no:

http://www.ca1.uscourts.gov/cgi-bin/getopn.pl?OPINION=98-9012.01A

The Justices found, "In cases where the creditor received actual notice of the automatic

stay, courts must presume that the violation was deliberate. See

Homer Nat'l Bank v. Namie, 96 B.R. 652, 654 (W.D. La. 1989). The

debtor has the burden of providing the creditor with actual notice.

Once the creditor receives actual notice, the burden shifts to the

creditor to prevent violations of the automatic stay. "

This is a good starting point. I would have never found this without you Justbroke.

[justbroke]

CEV, I'm not in any way trying to get you to use self-help. If your mom is in a pending Bankruptcy (Chapter 13), then her lawyer must continue to represent her during its pendancy (based on this service contract with her). Yes, you can look up some cases and they are all the same. Violating the Automatic Stay, even "inadvertently" is a no-no.

However, the Court can sanction the lawyer in any means from slapping his writst 9a rebuke) up to actual and punitive damages.