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Brent Blanchard
Brent Blanchard, Bankruptcy Attorney
Category: Bankruptcy Law
Satisfied Customers: 1975
Experience:  Twelve years experience in all aspects of debtor & creditor BK.
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I need help, I have a judgment from Merrill Lynch. Last year,

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I need help, I have a judgment from Merrill Lynch. Last year, it was a uphill batter, but the trustee finally granted my bankruptcy. Unfortunately, the judgment was excluded from the chap. 7. I just received a subpeona asking for questions on my assets , for myself and my spouse. I feel that I already went thru this during my bankruptcy filings, and do not want to go thru it again. Also, the debt is $411,000, with an annual interest rate of 9%. There is no way I can even pay the interest payments. Unless I hit lotto, there is no way this debt will ever be paid. Also, I was never served properly in regards XXXXX XXXXX judgment. What should I do? Help.
Submitted: 8 years ago.
Category: Bankruptcy Law
Expert:  Brent Blanchard replied 8 years ago.
If the judgment was "excluded" from the bankruptcy because it was accidentally left out, the case should be re-opened to properly include it and get the judgment debt discharged.

If it's not listed, it cannot be discharged, and it wasn't something anyone went through during the BK.

If the judgment was properly listed on the schedules but was excluded because the judgment creditor successfully challenged its dischargability, then the debt WAS part of what you went through with the BK but you essentially lost. The term "res judicata" would apply to EVERYTHING you or the judgment creditor would try to do about that debt from now on. The issue has been decided, and if the time for appeal or motion to reconsideration or whatever has passed, then there really is nothing left to do.

An earlier Chapter 7 is NOT an obstacle to filing a Chapter 13 for anything that was not previously discharged. The cute name for this is the "Chapter 20" (7 + 13 - 20, there is not really a Chapter "20" in the BK code). Many, but not all, debts not dischargeable in Ch 7 can be discharged in Ch 13 after all payments in the approved 5-year plan are made. The payments are based on actual regular income, minus ALLOWABLE living expenses. Just about every penny left over goes to the BK trustee, who divides it among the creditors until the Plan is completed.

Most people who think they were not properly served regarding a lawsuit which has gone to judgment are not aware that service *can* be by publication in the newspaper if the plaintiff can't find you. Challenging a judgment as void because of improper service requires a very fact-intensive inquiry beyond the scope of what can be done on an informational site like this one. However, please be aware that quashing prior service of process often only rewinds the clock to the beginning, and the plaintiff can then just start all over again and do service properly and leave you to defend the lawsuit. If the judgment was based on money loaned and not paid back, that would be a hollow victory followed by another loss.

Thank you.


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Customer: replied 8 years ago.
Should I answer the subpeona , questionaire form that the attorneys mailed me?
Can I refer them to the fact that I already went thru this process with my bankruptcy, which the plaintiff was listed as a creditor.
Expert:  Brent Blanchard replied 8 years ago.
Sorry, the additional information was not yet showing for me while I was typing my answer.

The short-term concern: Yes, you must respond to the subpoena, including filling out the questionnaire.

Your BK attorney should have clearly explained that debts arising from a breach of fiduciary duty are NOT dischargeable in a Chapter 7.

You did NOT receive a discharge of the debt in BK, so referring to that fact is irrelevant. It won't help. What you need to do now is get very familiar with New York's scheme of what property and income is exempt from execution, so you can properly invoke those protections.

"I wrote to the judge, and the plaintiff's attorney's that because of their error, I did not have time to even consult with an attorney, and if the case could be postponed for 30 days. No response came back." That is a great example of why there are laws against people practicing law without a license. The proper and effective way to get what you asked for would have been through a motion to quash service and a motion to continue the proceedings, in compliance with NY law and court rules. If someone had charged you money to write those letters with the obvious goal of getting things delayed until you could get an attorney, they would have given you bad advice and provided no services of value either. Study at the local law library would have been your friend.

The fiduciary element underlying the debt is troublesome, because the ultimate "super discharge" under Chapter 13 might be successfully challenged by the creditor by proving that the debt arose from fiduciary fraud. However, keeping payments to what can be afforded under current income, instead of getting whacked by the full amount allowable under NY state wage garnishment, might still make a Ch 13 sensible.

To know for sure, you would need a full-blown consultation with a BK attorney.

Thank you.
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