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I had a Chapter 7 no-asset bankruptcy. I forgot to add a debtor to my matrix. Was sued in state court and lost, any recourse?
Anonymous4 views4 answers
This debt was from a client in my construction firm. I got a dp from a client in '07, she put me off for over 2 yrs and by the time she was ready to go I went through a lot of life changes, cancer, surgeries, divorce, foreclosure, closed business. informed them business was closed and did not here from her again. I filed bankruptcy in early '11, she file suit in '12 in state court. My attorney at that time informed her of the Ch. 7. Was vacated then reinstated. My Attorney went to court, the judge questioned the viability of the whole thing but still ruled against me and awarded them treble damages. I am appealing but pro se. My attorney did not argue well, I have the transcripts, so I want to just argue law, not facts. Can I use 523a(3)A as a basis that this should never have been filed?
Was your business an LLC or corp? Di it file bk? Was the lawsuit against you or the corp/llc business? It matters.
As a general rule, debts no listed in a "no asset" chapter 7 are discharged (unless they would not have been discharged had they been listed). See, In re Beezley, 994 F.2d 1433 (9th Cir. 1993) ( reopening was useless because the case was no asset and no bar date and therefore creditor’s debt was discharged under §§ 523(a)(3)(A) and 727(b).) In general, filing the lawsuit is a violation of the post-discharge injunction. My recollection is that state court judgment is "void" (as opposed to voidable). I'd try to talk sense into the appeals court by citing Beezley and/or authority applicable in your jurisdiction. You might also file a lawsuit in the bankruptcy for violation of the post-discharge in junction and a declaration the the state court judgment is void. If nothing else, you might threaten that and hope the creditor agrees to dismiss the state court matter.
Good luck!
File motion with bankruptcy court to reopen your case for the purpose of amending on a prepetition debt. If case is reopened, then amend on the creditor and file an adversary proceeding for the bankruptcy court to determine the dischargeable nature of the debt. If the court will not reopen your case, then invoke the Breezley case, no-asset, no distribution, no harm, no foul. Then file a motion for the court to apply section 524 discharge injunction against the post petition state court action, judgment, and collection action. Good Luck!
As Robert points out, the path of least resistance may be to re-open the bankruptcy, add this creditors, and request an order from bankruptcy court voiding the judgment.
However, as Robert also points out, who was the defendant in this lawsuit and who was the debtor in bankruptcy? If you filed personal bankruptcy, but the plaintiff sued the company...that's okay. If you filed personal bankruptcy and the plaintiff sued you individually (i.e. you were a named defendant)...that is not okay.
I suspect there is more to the story. Most state judges understand and are respectful of bankruptcy. The legal issues are straightforward. As such, I doubt the success or failure had anything to do with how your attorney argued (candidly, the reason you think he/she didn't argue well is that you lost...had you won???). As such, there might be more of an issue. Maybe the plaintiff was alleging fraud which wouldn't have been discharged in BK in the first place.
Generally, a contractor who violates the NJ Consumer Fraud Act or the Home Improvement Regulations or the Contractor Registration Act is deemed to have engaged in statutory fraud punishable by treble damages. Generally, fraud is not dischargeable in bankruptcy. An person attempting to file an appeal ought to have an attorney. See 11 U.S.C. § 523(a)(4).
