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How to handle a Bankruptcy court motion to stay enforcement

San Marcos, CA |

Client ran up a bill of $2,400. Client filed Bankruptcy but only listed $1,200 on the BK schedule. Client sent me an email asking for continued representation and so I finished his case for $600 more. Client failed to pay me and I sued him in small claims for $1,800 (2,400 - $1,200 discharged + $600). Client hired a debt defense atty and filed a motion to reopen the Bankruptcy which was granted. Now client is filing a motion to stay enforcement of the Judgment and $5,000 in sanctions claiming:1) the $600 is no good because there was no formal reaffirmation agreement just the email, and 2) the amount owed was only $1,200 not $2,400 but I have the invoices. Do I just filed my response to the BK motion with my own request for $5,000 in sanction for filing a bogus motion?

Attorney Answers 4

  1. You violated the automatic stay, and did it with knowledge of the Chapter 7. That means you are subject to possible sanctions from the Bankruptcy judge. Are you a lawyer? If so, the Judge might be more willing to impose sanctions. Your best option is to see if the debtor's lawyer will agree on a settlement whereby you both walk away. If not, hire a Bankruptcy lawyer to try to make sure you don't end up writing a bigger check. Sure, you might have a claim for $600 in post-petition work, but I would not want to test the Judge on that, or a request for your fees for a "bogus motion (because it is not a bogus motion). That said, I am telling you what Judges might do in my district, based only on what you posted. CA lawyers may post information on what they believe judges in your district might do.

  2. If the work requested by the client for $600 is post-petition you might be entitled to recover that, but filing a lawsuit against a client which includes pre-petition debt component exposes you to liability for a violation of the automatic stay. At this point, you should seek to avoid further damages by negotiating a settlement and even voluntarily dismissing your state court case and vacating that judgment. If you are a lawyer, this is something that might be reported to the state bar.

  3. The mistake you are making is thinking that he only discharged 1,200. The specific amounts listed on Schedule F are somewhat irrelevant. Whatever he owed you on the date of filing has been discharged ... even, in fact, if he had not listed you at all. The only amount you could have sued for is the post-petition 600; but, since you have now exposed yourself to sanctions for violating the discharge injunction, you would be better served to withdraw your pleadings and try to get out of this mess unscathed.

  4. As the other attorneys pointed out, you goofed in a big way. The only amount you are legally entitled to collect for the work that you did after the debtor filed for bankruptcy. Everything else was wiped out. If you are lucky, you might be able negotiate a "walk away" agreement and not have to pay anything to the debtor and his/her attorney.

    First, the firm is a debt relief agency according to the U.S. Bankruptcy Code. We help people file for bankruptcy. We also do other stuff and we do it well, but Congress wants me to post this notice. Second, nothing on this site is legal advice. You are not my client unless you enter into a written agreement signed by you and me.

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