"State" Judgment

[spearmint]

I am putting this here as I don't know whether to put it in Chapter 7 or 13.

I have a judgment against me by the state. At the time this all came down I was on death's doorstep and had been sick for 4-5 years and the last thing on my mind was dealing with all this. Well . . . because I didn't do anything the state got a judgment against me. The principal that I owe is minute compared to the total figure they slammed me with which includes 4-5 times the principal in interest and penalties.

I contacted BK attorney number 1 who told me all I could do was file a Chapter 13. I asked him to contact the state to see if I could work out a reasonable payment plan without having to file a Chapter 13. He said they wouldn't budge a single dollar. He also mentioned that there was a chance that the state would not contest the discharge if I filed a Chapter 7. I doubt that, though, since they wouldn't budge on the total amount when he contacted them to work out a payment plan.

Bk attorney number 2 told me to fight it as they would have to prove the fraud element they assumed in the judgment.

I contacted a state senator who told me there was nothing that could be done but because I was very ill and without health insurance at the time I had got caught in the cracks and they intended to do what they could to change the laws so that this didn't happen to anyone else. Great! It wouldn't help me, though! The senator's office contacted the state and they suggested I appeal.

I contacted a local office of the state to discuss appealing. I was told there are eight levels of appeals and each one takes 6-8 weeks. Great!

I do want to pay back the principal and a portion for fees BUT the total amount they have sued me for is totally ridiculous! I also do not want to file a Chapter 13 to do it. Chapter 13 is like Twenty First Century debtors' prison! I am not someone who can just stay in limbo for 5 years and stop growing. I put myself back in school to change careers so I can increase my income and start a business. Filing Chapter 13 says "No" to all that!

I was very, very sick when all this happened and I was trying to stay afloat financially. There's a lesson here, too - never be without health insurance! I had lost my job and could not afford COBRA and, because I could not get treatment, I got worse and worse.

I am at a point where I am so stressed and so confused, I don't know which way to turn.

I would love some feedback and advice.

[BKDefender]

What kind of allegations of fraud do they have against you?
I agree with BK attorney #2 - unless there are actual findings of fact by the judge or jury in a case that find the existence of fraud (which there is not in a default judgment), then a bankruptcy judge will make them prove the fraud element in court. Here in Nevada proving fraud in bankruptcy court is more difficult than in state court, but if there are actual findings of fact detailing that the court finds fraud, then the bankruptcy court will generally accept those findings. In a default judgment, there are no findings to support that.

--William

[spearmint]

What kind of allegations of fraud do they have against you?
I agree with BK attorney #2 - unless there are actual findings of fact by the judge or jury in a case that find the existence of fraud (which there is not in a default judgment), then a bankruptcy judge will make them prove the fraud element in court. Here in Nevada proving fraud in bankruptcy court is more difficult than in state court, but if there are actual findings of fact detailing that the court finds fraud, then the bankruptcy court will generally accept those findings. In a default judgment, there are no findings to support that.

--William

Thank you, BKDefender! You have given me some hope.

There were three or four instances of what they consider to be "fraud" but even though it looks that way it is really their assumption. Is something that "appears" to be fraud sufficient to say that it IS fraud or do they have to literally prove each instance by itself? Perhaps their thinking is that because it happened more than once it was intentional, I don't know.

Anyway, in my case there were extenuating circumstances and they know nothing about them. I doubt they would care either.

I was extremely ill at the time all this happened and it is like a nightmare now.

[spearmint]

What kind of allegations of fraud do they have against you?
I agree with BK attorney #2 - unless there are actual findings of fact by the judge or jury in a case that find the existence of fraud (which there is not in a default judgment), then a bankruptcy judge will make them prove the fraud element in court. Here in Nevada proving fraud in bankruptcy court is more difficult than in state court, but if there are actual findings of fact detailing that the court finds fraud, then the bankruptcy court will generally accept those findings. In a default judgment, there are no findings to support that.

--William

May I send you a PM?

[BKDefender]

Sure. But unless you're in Nevada, I can't answer questions as to the laws of your state.

Suffice it to say that pleading fraud does not prove fraud and without an actual hearing 'on the merits' where the 'finder of fact' (judge or jury) actually makes findings of fact that fraud occurred, the BK court will require an evidentiary hearing so the BK judge can determine if there was actual fraud. The state would need to file an adversary proceeding under 523(a)(2) to have the BK court determine that the debt is non-dischargeable based on fraud.

--William