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Roger
Roger, Attorney
Category: Bankruptcy Law
Satisfied Customers: 26861
Experience:  BV Rated by Martindale-Hubbell; SuperLawyer rating by Thompson-Reuters
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Customer Question

I am suing a person for fraud re: an unpaid debt in CA. Said person has refused to provide any bank records pertaining to where the $ I lent her went. We suspect not for what our written agreement stated. Now that the court ordered her to provide docs, she filed for bankruptcy.
1. Now that our case has been stayed, can she withdraw the petition, and then keep refiling and each time be granted a new stay, thus dragging this on forever? She also filed Ch. 13 for unsecured debts over $1,000,000. This appears to be ineligible for Ch. 13. Again, can this be rejected for tech reasons and then allowed to file Ch. 11 and then 7 and then 13 again and continue to play this game to avoid having to disclose docs?
2. If she follows through with her bankruptcy petition, how does the Fed court determine if our suit is credible or her debt to be dismissed or not? Do they make a fraud judgement, or merely review our case and allow it to proceed to State court if it holds merit? We had a deposition scheduled and a court date set. Is a fraud case eligible for a stay?

thanks
Submitted: 2 years ago.
Category: Bankruptcy Law
Expert:  Roger replied 2 years ago.
Hi - my name is XXXXX XXXXX I'm a Bankruptcy litigation attorney.

1. For most chapter 7 and 13 cases, the automatic stay remains in effect until the debtor gets a discharge from his or her debt, the property in question is no longer a part of the estate. However, the stay can't last forever, and if the debtor is abusing the system, and bouncing around from one bankruptcy filing to another, the judge can end the automatic stay. However, it's not going to matter with you if your debt is unsecured because it's not likely that you'll be paid anything under a chapter 7, 11 or 13. Only secured creditors usually benefit from a debtor filing chapter 11 or 13. Thus, you are probably not going to recover unless she has enough cash flow to pay all secured creditors (debts with collateral) and still has money left over to pay unsecured creditors (debts without collateral). The only real exception is if the claim is for fraud.

2. If your claim is for fraud, it is not dischargeable in bankruptcy. Thus, you can file an adversary proceeding with the bankruptcy court and proceed or you can file a motion with the court and ask that you be allowed to proceed with in the current venue and then report the final decision of the civil trial court to the bankruptcy court. That will be up to the judge.
Customer: replied 2 years ago.

Some of the specificities of my questions weren't addressed. I realize a judge can always say she's abusing the system. My first question was can she withdraw her petition for ch 13 and refile and thus prolong the stay?


 


Online I read qualifications to file Ch 13. There were limits to unsecured debt. Is $1 million outside of her eligibility to file ch. 13? If so, can she simply refile either ch. 7 or 11 and thus prolong the stay?


 


How does the bankruptcy court determine if our fraud suit is credible? I can't imagine that simply because a fraud suit is in motion, the stay is automatically lifted.


 


If you could, please review my initial questions and answer them as best you can. The specifics are what I need, not merely a cut and paste answer.

Expert:  Roger replied 2 years ago.
Sorry if I overlooked something. Maybe this covers it.

The stay would remain in effect as long as the person is in bankruptcy unless you ask the court to lift the stay due to abuse of the system. It is up to the judge as to whether the stay is lifted.

Pursuant to 11 USC 109(e), chapter 13 relief is not available to debtors with unsecured debt higher than $336,900 or secured debt higher than $1,010,650.00. If she doesn't qualify, she can convert to a 7.

The court will not evaluate your fraud claim. Instead, if you have sued for fraud, the court can either direct you to file an adversary proceeding or either refer you back to the trial court.
Expert:  Roger replied 2 years ago.
Hi -

I don't understand what you believe I didn't cover. I've reviewed the question several times over, and everything has been covered. Thus, I don't suppose I can help you if the answers provided don't cover your question.

I'll opt out and allow someone else to try.
Expert:  Roger replied 2 years ago.
Hi -

I don't understand what you believe I didn't cover. I've reviewed the question several times over, and everything has been covered. Thus, I don't suppose I can help you if the answers provided don't cover your question.

I'll opt out and allow someone else to try.

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