I have posted on here several times regarding what we thought might be potential issues. We never hid anything from anybody, we were always upfront with the lawyer and the trustee. Well, he goes. . .
We filed Chapter 7 on 9/21/07 on what our attorney stated was a no asset case. Our house had a first lien from our mortgage holder and a second lien to my father. My dad loaned us the money for the down payment in 11/06. However, I failed to record the deed until 5/07. In addition, my father loaned us the money for a car and recorded a lien on it at the time of purchase.
After our 341 we received the trustee's application to employ himself as attorney and his objections to the exemptions stating that the lien to my father was an avoidable lien because it had not been perfected (recorded within 30 days) and therefore he would step into the shoes of the lien holder, my dad, and claim the equity in the home. The car lien was perfected so this ended up not being an issue. With the lien on the house avoided by the trustee, we were not going to be able to claim our homestead exemption.
Not knowing where this is going and wanting to preserve our home, we make a motion to convert to a 13 so that if we are not allowed our exemption we can pay the required equity. The trustee immediately responds with an objection to the conversion citing bad faith and that the 13 trustee will not take a preference action to avoid the lien.
Okay, our attorney does some research and finds a case out of Ohio, we are in NC so it is not binding, but it gives us and idea. The judge in this cased stated that consideration for equity should be given to the debtors if the cancellation is done in a timely manner. The judge actually ruled in favor of the trustee but only because the parents in this case did not cancel the lien until many (6-8) months after an adversarial proceeding was filed. So, we immediately had my dad record a satisfaction, thus canceling the lien. He did not indicate that it had been paid. We immediately informed the trustee of this and requested that he make no more motions until the hearing on 1/3. Our attorney cited the case he was using for the argument of canceling the lien and made sure the trustee knew the lien had been undone and that we knew that this would not necessarily mean that we would be allowed the exemption. If not allowed the exemption, he explained that we had preserved more equity in the estate because the trustee would not have to file a motion to avoid the lien and accrue additional administrative costs. We put more into the estate without it costing anything.
Meanwhile, we are preparing to go to court on 1/3 in regards to the objection to the conversion to the 13 and the homestead exemption. We were set to discharge on 12/28. On 12/27 we receive a Notice of Motion to Extend Time to Discharge. On 12/31, both my father and us receive adversarial proceedings accusing my father of violation of stay and us once again of bad faith. He is objecting to our discharging and suing us both for the value of the cancelled lien. He is requesting in essence that the court undo the cancellation so that he can undo the deed himself. What sense does this make? He states that my father, who is also lied on the document by stating it was "paid and satisfied". Again, we never used the words paid.
Anyway, we go to court today. The trustee lies one time after another. He states that his basis for objection to the 13 conversion is that we exhibited bad faith by canceling the lien. Wait a minuted he was calling it bad faith back on 12/4 in his objection. We didn't cancel the lien until 12/14 and he was notified after that. This was the only argument he made for bad faith.
Also, he stated that we didn't tell him about the cancellation that he found out about it on 12/30 while preparing for this case. My attorney presented evidence that showed that we did inform the trustee prior to his filing any additional motions and that the trustee knew about it no later than 12/21. Our attorney informed the courts that what we did was based upon the statements from this judge out of Ohio so how could it be done in bad faith and that also we did it at his request so we should not be punished for his advice.
A couple of questions for anybody out there familiar with any of these issues. How can my dad be in violation of a stay when is placing money back into the estate?
Oh, I forgot, all the motions filed after 12/27, including the Motion to Extend Time to Discharge were filed by another attorney, out of the trustee's firm. This attorney has not been authorized to be employed by the courts. The court specifically list only our trustee's name. My question in all this, which my attorney is looking into, are these motions valid? If not, and our Trustee/attorney has to file them, they had to filed within 60 days--which we are out of. Is anyone familiar with right to employ professionals?
Does anyone have any suggestions? I feel like the things went well today. Our lawyer said this judge does not typically like to hear testimony but the judge requested me to testify. Also, our lawyer indicated that the only person benefiting from all these motions was the trustee himself. Of course, the trustee objected. The judge just looked at our lawyer but did not sustain the objections. Our lawyer waited several seconds and then withdrew his statement.
It just stinks because people who are trying to fraud the system get away with it everyday but those of us who just had a run of bad luck, lost job, failed business, then unemployed again, can't get the fresh start bankruptcy was set up for.
Thanks for reading. I will let you know what happens.
I would definitely recommend that everyone take a very close look at any liens that could be avoided prior to filing. We thought we had done this but apparently our lawyer slipped up. I will say they have done there best to fix it and have been at our back and call without any additional charges. I think they knew they screwed up. This case has been our attorney's top priority for months and he always takes my call. He is part of a big firm so this must be a big deal. The receptionist always tries to put me through to a paralegal until I tell her who I am and she puts me right through.
Keep your fingers crossed that the judge rules in our favor. We really just want a fresh start. I hope that the fact that the trustee was caught in several mis-truths sets the tone in our favor.
We filed Chapter 7 on 9/21/07 on what our attorney stated was a no asset case. Our house had a first lien from our mortgage holder and a second lien to my father. My dad loaned us the money for the down payment in 11/06. However, I failed to record the deed until 5/07. In addition, my father loaned us the money for a car and recorded a lien on it at the time of purchase.
After our 341 we received the trustee's application to employ himself as attorney and his objections to the exemptions stating that the lien to my father was an avoidable lien because it had not been perfected (recorded within 30 days) and therefore he would step into the shoes of the lien holder, my dad, and claim the equity in the home. The car lien was perfected so this ended up not being an issue. With the lien on the house avoided by the trustee, we were not going to be able to claim our homestead exemption.
Not knowing where this is going and wanting to preserve our home, we make a motion to convert to a 13 so that if we are not allowed our exemption we can pay the required equity. The trustee immediately responds with an objection to the conversion citing bad faith and that the 13 trustee will not take a preference action to avoid the lien.
Okay, our attorney does some research and finds a case out of Ohio, we are in NC so it is not binding, but it gives us and idea. The judge in this cased stated that consideration for equity should be given to the debtors if the cancellation is done in a timely manner. The judge actually ruled in favor of the trustee but only because the parents in this case did not cancel the lien until many (6-8) months after an adversarial proceeding was filed. So, we immediately had my dad record a satisfaction, thus canceling the lien. He did not indicate that it had been paid. We immediately informed the trustee of this and requested that he make no more motions until the hearing on 1/3. Our attorney cited the case he was using for the argument of canceling the lien and made sure the trustee knew the lien had been undone and that we knew that this would not necessarily mean that we would be allowed the exemption. If not allowed the exemption, he explained that we had preserved more equity in the estate because the trustee would not have to file a motion to avoid the lien and accrue additional administrative costs. We put more into the estate without it costing anything.
Meanwhile, we are preparing to go to court on 1/3 in regards to the objection to the conversion to the 13 and the homestead exemption. We were set to discharge on 12/28. On 12/27 we receive a Notice of Motion to Extend Time to Discharge. On 12/31, both my father and us receive adversarial proceedings accusing my father of violation of stay and us once again of bad faith. He is objecting to our discharging and suing us both for the value of the cancelled lien. He is requesting in essence that the court undo the cancellation so that he can undo the deed himself. What sense does this make? He states that my father, who is also lied on the document by stating it was "paid and satisfied". Again, we never used the words paid.
Anyway, we go to court today. The trustee lies one time after another. He states that his basis for objection to the 13 conversion is that we exhibited bad faith by canceling the lien. Wait a minuted he was calling it bad faith back on 12/4 in his objection. We didn't cancel the lien until 12/14 and he was notified after that. This was the only argument he made for bad faith.
Also, he stated that we didn't tell him about the cancellation that he found out about it on 12/30 while preparing for this case. My attorney presented evidence that showed that we did inform the trustee prior to his filing any additional motions and that the trustee knew about it no later than 12/21. Our attorney informed the courts that what we did was based upon the statements from this judge out of Ohio so how could it be done in bad faith and that also we did it at his request so we should not be punished for his advice.
A couple of questions for anybody out there familiar with any of these issues. How can my dad be in violation of a stay when is placing money back into the estate?
Oh, I forgot, all the motions filed after 12/27, including the Motion to Extend Time to Discharge were filed by another attorney, out of the trustee's firm. This attorney has not been authorized to be employed by the courts. The court specifically list only our trustee's name. My question in all this, which my attorney is looking into, are these motions valid? If not, and our Trustee/attorney has to file them, they had to filed within 60 days--which we are out of. Is anyone familiar with right to employ professionals?
Does anyone have any suggestions? I feel like the things went well today. Our lawyer said this judge does not typically like to hear testimony but the judge requested me to testify. Also, our lawyer indicated that the only person benefiting from all these motions was the trustee himself. Of course, the trustee objected. The judge just looked at our lawyer but did not sustain the objections. Our lawyer waited several seconds and then withdrew his statement.
It just stinks because people who are trying to fraud the system get away with it everyday but those of us who just had a run of bad luck, lost job, failed business, then unemployed again, can't get the fresh start bankruptcy was set up for.
Thanks for reading. I will let you know what happens.
I would definitely recommend that everyone take a very close look at any liens that could be avoided prior to filing. We thought we had done this but apparently our lawyer slipped up. I will say they have done there best to fix it and have been at our back and call without any additional charges. I think they knew they screwed up. This case has been our attorney's top priority for months and he always takes my call. He is part of a big firm so this must be a big deal. The receptionist always tries to put me through to a paralegal until I tell her who I am and she puts me right through.
Keep your fingers crossed that the judge rules in our favor. We really just want a fresh start. I hope that the fact that the trustee was caught in several mis-truths sets the tone in our favor.
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