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Phillips Esq.
Phillips Esq., Attorney-at-Law
Category: Bankruptcy Law
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Experience:  B.A.; M.B.A.; J.D.
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I am a creditor in a Chapter 13 case against debtors who I

Resolved Question:

I am a creditor in a Chapter 13 case against debtors who I recently evicted in a hard-fought FED/Eviction proceeding (lifting of the stay was granted in that case by the 13 court).

Debtors/Tenants were ordered by the state court to vacate the premises and remove all their personal property. They failed to remove all alleged personal property and after the statutory time was conclusively abandoned.

After abandoned remaining property (mostly junk) was disposed of. None of this personal property was disclosed on Debtors 13 Schedule of Assets. Debtors/Tenants have now filed a post-petition lawsuit against me in State Court for a claimed monetary value of this abandoned property.

The question is, can debtors in a 13 proceeding legally file a post-petition lawsuit against another party (in this case Creditor and former Landlord) without having received permission of either the Court or Trustee? The case is without merit, but need suggestions on best way to present to 13 judge.
Submitted: 5 years ago.
Category: Bankruptcy Law
Expert:  Phillips Esq. replied 5 years ago.

The question is, can debtors in a 13 proceeding legally file a post-petition lawsuit against another party (in this case Creditor and former Landlord) without having received permission of either the Court or Trustee?

Response: Yes, because automatic stay of the bankruptcy code barring most lawsuits or continuation of most lawsuits only applies to lawsuits against the debtor and not the ones initiated by the debtor although the Chapter 13 Trustee may acquire an interest in the action and a party might be able to remove the action to the Bankruptcy Court. In the State Court, you would argue that since the property in question was not listed on Schedule B of the Debtors' bankruptcy case that the debtors have waived their rights to the property. This is probably why you want to remove the case to the bankruptcy Court because the State Court may not be privy to all the facts in the case and more importantly the State Court Judge may not be familiar at all with the bankruptcy rules. See 11 U.S.C. Section 362 (a)

The debtors here are trying to commit bankruptcy fraud by purposefully not listing the property in question in their bankruptcy Schedule and then bringing an action against you outside the bankruptcy forum for monetary damages for the alleged destruction of the property that was never listed on Schedule B in the first place in violation of the bankruptcy code. See 11 U.S.C Sections 152 and 157.

File to remove the case to the Bankruptcy Court and then litigate in the bankruptcy Court. Again, your defense would be that the property was not listed in Schedule B. Thus, debtors do not have ownership interest in the property at issue and therefore lack standing/legal capacity to bring the lawsuit in the first place.

Phillips Esq., Attorney-at-Law
Category: Bankruptcy Law
Satisfied Customers: 13138
Experience: B.A.; M.B.A.; J.D.
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