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socrateaser
socrateaser, Attorney
Category: Bankruptcy Law
Satisfied Customers: 38910
Experience:  Attorney and Real Estate Broker -- Retired (mostly)
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FOR SOCRATES ONLY Im in CH13 and I have several causes

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FOR SOCRATES ONLY

I'm in CH13 and I have several causes to file adversary proceedings motions. If I convert to CH7, will I lose the ability to file the motions (stay violations) ?
Hello again,

A prior violation of the automatic stay cannot be waived by a conversion to a different Chapter of the bankruptcy code. Automatic stay violations are the most serious offense contemplated by the bankruptcy code other than outright fraud by a debtor on the face of the bankruptcy petition.

You have the right to have the court redress your complaint(s).

Hope this helps.
Customer: replied 3 years ago.

I was told by more than one attorney that adding post-petition creditors to my CH13 schedules would enjoin those creditors from collection actions. Since I've apparently gotten misinformation from board certified BK attorneys, I would like your opinion.

The question of whether or not a creditor, once added postpetition to a Chapter 13 debtor petition, is subject to the automatic stay is not squarely answered in the case law. However, "[c]onsidering the special provision for the allowance of postpetition claims in Chapter 13 cases, it seems reasonable to stay collection actions by such creditors, pending allowance of the claim or at least absent relief from the stay granted after notice and from a hearing during the pendency of the Chapter 13 case." 7 Norton Bankr. L. & Prac. 3d § 146:20.

The above is not precedent. It is the opinion of a scholarly treatise. In my opinion, the treatise' conclusion, and those of the other attorneys with whom you have corresponded is incorrect. Bankr. Code 1305(a) provides, "A proof of claim may be filed by any entity that holds a claim against the debtor -- (1) for taxes that become payable to a governmental unit while the case is pending; or (2) that is a consumer debt, that arises after the date of the order for relief under this chapter, and that is for property or services necessary for the debtor’s performance under the plan."

The term, "may be filed," in the subsection, expresses the well-established interpretation that the creditor can avoid its claim becoming part of the bankruptcy estate by choosing not to file a proof of claim with the bankruptcy court. And, if the claim is not part of the estate, then it also cannot be within the scope of the bankruptcy stay -- which applies only to claims that are either part of the estate or which "arose before the commencement of the case under...[Title 11: the U.S. bankruptcy code]."

BotXXXXX XXXXXne, it's up to the judge, because there's no dispositive case law precedent on the question.

Hope this helps.

Customer: replied 3 years ago.

Thanks for such a thorough and authoritative answer.


 


In the matter of pre- or post-petition claims, it seems that there needs to be a further distinction: Did the liability arise before or after the petition ?


 


To clarify, I amended my schedule to include debts that arose after the original petition was filed.


 


Am I correct in understanding your opinion that, because a creditor did not file a claim (or an objection) before the plan was confirmed, they still have a claim because they are not part of the estate having not done what they were required to do ?

In the matter of pre- or post-petition claims, it seems that there needs to be a further distinction: Did the liability arise before or after the petition ?

A: Now you're thinkin' like a lawyer.

To clarify, I amended my schedule to include debts that arose after the original petition was filed.


Am I correct in understanding your opinion that, because a creditor did not file a claim (or an objection) before the plan was confirmed, they still have a claim because they are not part of the estate having not done what they were required to do ?

A: No. I shall explain:

1. A creditor claim is part of the bankruptcy estate if the claim (i.e., "claim" meaning the right to payment -- something, which in your case is not at all certain to exist), arose before the filing of the bankruptcy petition.

2. A prepetition claim (above) is part of the bankruptcy estate, whether or not the debtor files a proof of claim.

3. A postpetition claim (one which arose after filing of the bankruptcy petition), is not part of the bankruptcy estate, unless the creditor chooses to include it, by filing a proof of claim.

4. The date of plan confirmation is irrelevant. The date that the claim arose, the date of filing of the bankruptcy petition, and the creditor's choice in filing a proof of claim, are the factors which determine whether or not a claim is part of the estate -- and thus, whether or not the automatic stay applies to that claim.

So, if you can show that this claim actually arose before the filing of the bankruptcy petition, then it'ss a prepetition debt, and that means it's dischargeable (unless the creditor proves that the claim was purpetrated by you as a fraud) and subject to the automatic stay.

Hope this helps
socrateaser and 2 other Bankruptcy Law Specialists are ready to help you
Customer: replied 3 years ago.

A. Is that a good thing ?


 


B. I'm sure I'll be back in touch.


 


Thanks

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