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On Schedule F of his Chapter 7 filing, a debtor listed a judgement

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On Schedule F of his Chapter 7 filing, a debtor listed a judgement based on a fraud claim. The creditor had received a default judgment due to debtor's no-show on the court date. After the creditor received the debtor's Chapter 7 notice, he filed a complaint seeking to prevent the discharge of the fraud judgment.

Should the debtor's attorney answer the complaint? Is the attorney required to do so? If the attorney does answer, can he make arguments against some of the facts that the creditor put in his non-dischargeability complaint, or are disputes of those facts not allowed due to the final judgment in the fraud claim?
Submitted: 2 years ago.
Category: Bankruptcy Law
Expert:  JoeLawyer replied 2 years ago.
Should the debtor's attorney answer the complaint? Is the attorney required to do so?

The court sees an adversary proceeding as a separate matter from a bankruptcy filing, and so the attorney is not, as a matter of law, required to do anything regarding adversary proceedings just because the attorney represents the debtor in the underlying bankruptcy case. Indeed, adversary proceedings are supposed to be served directly on the debtor as defendant, not on debtor's attorney.

However, the fee agreement or Disclosure of Compensation may compel the attorney to answer the complaint. But, most of the fee agreements I have seen indicate that the attorney will do only the Chapter 7 (prepare and file petition, attend 341, file reaffirmation agreements, etc), but says the fees do not also include any contested matters, adversary proceedings, etc.

So, I doubt if the attorney is required to answer, though at the very least the attorney should advise the debtor that the complaint was filed and that the debtor should hire adversary proceeding counsel to file an answer timely, or file an answer him or herself.

If the attorney does answer, can he make arguments against some of the facts that the creditor put in his non-dischargeability complaint, or are disputes of those facts not allowed due to the final judgment in the fraud claim?

Bankruptcy Courts are courts of equity, and they will generally listen to all the facts and circumstances in the case (i.e. the "totality of the circumstances"), particularly when it was a default judgment. When I have seen a plaintiff cry res judicata regarding the determination of the facts, bankruptcy courts generally blow by that argument and want to hear everything nonetheless. Since the situation you talked about was a default judgment, I doubt if the trial court made any findings of fact anyway.

Fraud is generally fairly difficult to prove, so I would guess the plaintiff will still have an uphill battle in the adversary proceeding unless the facts are very good in favor of the plaintiff.

LEGAL NOTICE: I am only licensed to practice law in certain state(s) and I cannot give legal advice to someone who does not reside in a state in which I am licensed, nor shall anything I say in the above answer or elsewhere on this site be deemed legal advice, even to someone who resides in a state in which I am licensed. Funds I receive from JustAnswer.com are gratuities paid to me for taking the time to respond to questions, not for legal advice. This forum is designed to provide general information only, and information herein is not warranted to be correct or applicable in any way since laws may have been misinterpreted herein, since laws change from time to time, and since the impact of those laws on any particular situation varies. The information presented in this site shall not be construed to be formal legal advice nor the formation of an attorney-client relationship. Persons accessing this response are encouraged to seek independent legal counsel in their jurisdiction for guidance regarding their individual circumstances. Do not take any action or inaction based on information presented herein since it is informational and may not be accurate or applicable to you; it merely attempts to give you a basis of knowledge to help you formulate questions to ask a legal or other professional in a face-to-face meeting in your jurisdiction. JoeLawyer is an attorney but does not hold himself out to be a specialist or expert in any area, regardless of assertions made by any third party, and any implication of being an expert or specialist herein is made in error. I hope the information presented above is useful to you. Answer above is (c) JoeLawyer. All rights reserved.
JoeLawyer, Attorney
Category: Bankruptcy Law
Satisfied Customers: 767
Experience: Attorney in the practice of Bankruptcy Law since 1996
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Customer: replied 2 years ago.
So are the federal bankruptcy procedure rules similar to the Fed Rules of Civ Pro - e.g. debtor can file a 12(b)(6) motion for dismissal?

Also, what would an experienced attorney charge to file a 7 or 8-page answer in this situation? And if the case goes to court, what estimate would you give for the further legal fees in such a case?
Expert:  JoeLawyer replied 2 years ago.
So are the federal bankruptcy procedure rules similar to the Fed Rules of Civ Pro - e.g. debtor can file a 12(b)(6) motion for dismissal?

Yes, the Rules of Bankruptcy Procedure (HERE) basically track the Fed Rules of Civ Pro, and each rule usually refers to the Fed Civ Pro counter-part. The 7000's are the Bankruptcy Rules relating to Adversary Proceedings, and Rule 7012(b) says "Applicability of Rule 12(b)–(i) F. R.Civ.P. Rule 12(b)–(i) F.R.Civ.P. applies in adversary proceedings."

Also, what would an experienced attorney charge to file a 7 or 8-page answer in this situation? And if the case goes to court, what estimate would you give for the further legal fees in such a case?

That is really tough to say. I try to stick to the bankruptcy work only, so I've only done 2 adversary proceedings this year since I try to avoid them, and only one went to trial and I got the other one dismissed, so I don't have a whole lot of info on which to base an answer to this question. I would say the fees for the Answer might be $500 or so, and if it goes to trial, maybe another $3,500 (assuming no depositions, etc), or possibly $5,000 or more if there are depositions or other time-intensive things to do. That, of course, is really general since any trial may be much simpler or much harder than an "average." And, since you are talking fraud litigation, that may be more complicated than normal.

Joe

LEGAL NOTICE: I am only licensed to practice law in certain state(s) and I cannot give legal advice to someone who does not reside in a state in which I am licensed, nor shall anything I say in the above answer or elsewhere on this site be deemed legal advice, even to someone who resides in a state in which I am licensed. Funds I receive from JustAnswer.com are gratuities paid to me for taking the time to respond to questions, not for legal advice. This forum is designed to provide general information only, and information herein is not warranted to be correct or applicable in any way since laws may have been misinterpreted herein, since laws change from time to time, and since the impact of those laws on any particular situation varies. The information presented in this site shall not be construed to be formal legal advice nor the formation of an attorney-client relationship. Persons accessing this response are encouraged to seek independent legal counsel in their jurisdiction for guidance regarding their individual circumstances. Do not take any action or inaction based on information presented herein since it is informational and may not be accurate or applicable to you; it merely attempts to give you a basis of knowledge to help you formulate questions to ask a legal or other professional in a face-to-face meeting in your jurisdiction. JoeLawyer is an attorney but does not hold himself out to be a specialist or expert in any area, regardless of assertions made by any third party, and any implication of being an expert or specialist herein is made in error. I hope the information presented above is useful to you. Answer above is (c) JoeLawyer. All rights reserved.
JoeLawyer, Attorney
Category: Bankruptcy Law
Satisfied Customers: 767
Experience: Attorney in the practice of Bankruptcy Law since 1996
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