Dismiss Bk. Chap. 7 - State Of Illinois Southern Dist.

[denys]

1. 1st. atty. deliberately withheld critical state law info about transference of real estate to a relative.

2. 1st. trustee decided without questioning thoroughly the transfer was 'fraudulent' and alerted creditors that 'assets were being liquidated".  Not true of course.

3. When debtor found out what 1st. atty had done he was fired.

4. 1st.trustee was informed about what happened - asked to allow BK to be dismissed.  She refused(wanted money BUT then she gave up her law practice and became a BK judge in this district).

5. 2nd. trustee enters picture - haven't heard too much about her, act tough, but no actions yet.  

6. If debtor had been told the truth she would not have filed at all.

7.  Debtor is 80, Congestive Heart Failure, Pacemaker/Defibrillator, two stints, and facing being homeless becuase of this.

How can this bankruptcy be successfully dismissed, OR, the 1st. attorney made to indemnify the debtor?  He knows she will file legal malpractice suit against him if she loses her home(home in her name and son's name since 7/07. Meets Fed. requirements, but not state requirements which is 4 years(this is what the 1st attorney did not tell debtor)!  He knew, and deliberately withheld this fact, stating in a letter, that he did not tell her because he 'wants his clients to feel comfortable".  Can you help with website, particularly case laws that can be used to get this case dismissed?  Thank you for your help!

ANSWER: First of all, you can't just dismiss a chapter 7 case on your own, it requires a court order.  But why do you want it dismissed if you have a discharge of the debts already, which I suspect is the case?

What you want to do is prevent a fraudulent transfer adversary complaint being filed and the whole point of the uniform fraudulent transfer act which is what you're likely referring to is an attempt to hinder, delay or defraud creditors in which case the transfer can be set aside IF AND WHEN that is proven in a court of law, in this case bankruptcy court.

Rather than try to get the case dismissed(because it looks like you're trying to hide something then), lay out precisely why this transfer was made, what the transferee has paid for it(like ongoing mortgage payments etc) and that it was done(my guess is) for probate avoidance purposes.

This is what happens when people do things like that without getting legal advice.  Not to lecture you on this, but unfortunately you're stuck with this potentially fraudulent transfer.

The better way would have been for mom to set up a trust reserving a life estate to herself(which you can't sell for parking meter money even), upon her passing it goes to the kids and homestead the life estate.

Under the facts you describe, I don't see a case for fraudulent transfer succeeding but you need to get wiht the bankruptcy trustee and talk them out of it, or make a cash deal.

I suggest you get legal advice from a competent bankruptcy attorney in your jurisdiction, and not try to do any more of this yourself.

Sorry for the lecture, but bankruptcy is full of traps for the unwary.

Good luck.  I think you'll come out on top of this if it is properly presented to the current bky trustee.

Lee Horner

Goldstein, Horner & Horner, attorneys

Tucson, AZ

www.freshstartAZ.info

---------- FOLLOW-UP ----------

No, I'm not doing this myself - there is a new attorney but evidently not very effective and $$$ has been paid to the degree there isn't any more for a 3rd attorney.  He states he has tried to discuss this with the trustee(s) both of them, but apparently failed. We do have an appointment with the attorney this coming Monday to 'talk' about things, but he sells a pretty good bill of sale himself. Illinois is an extremely corrupt state - the current Gov. is now at trial trying to sell Obama's senate seat vacated when he ran for prez, the two gov's before this one is in prison, and how the interim gov. is  no better than the other two.  So, we are at our wits end on this thing and she is worried out of her mind.  The new attorney did submit a letter she wrote to him outlinging the cause for the transfer(and you are correct - no life insurance now) so the house needs to be sold when she dies in order to bury her and her children can't afford it - here its a minimum of $10,000.  That is a hardship.

Scolding?  Not to worry,  Very grateful for any help.  you see, the trustees here have one goal in mind - the money they can make off of each debtor that files and they can find a reason to take the property and sell it.  No, the bankruptcy has NOT been discharged, and it will be a year on June 30, 2010 when it was initially filed!  It's a can of worms.  There were 7 creditors that filed a Proof of Claim, and I've been successful in having three of them withdraw their claim, one for fraud(Citibank), one for statute of limitations, one for case had already been settled pror to the filing of the bankruptcy, but they decided to try to collect twice for the same debt, and the ones remaining will be challenged in BK. court, and I've prepared First Request for Production of Documents, plus two are outside the statute of limitations, too.  (It's 5 years for ILL., and 5 years for MO.)  

No, you've been great your your suggestions are sound - I'm just trying to help save some attorney fees and do some research for a protection since these attorneys like to withhold or not tell  you the truth of something.  It does have a tendency to make you a bit paranoid!   So, I'm studying up as much as I can on the subject.

[Roderic]

PS:  If you'll email me the court name(like bky court of the southern district of ny, NY division for example) and the debtor's name & case number I'll be glad to look at the docket & tell you in people talk what I see going on.  That might also help when you talk to the atty.

This is public record but you need a special electronic record access account, which as luck would have it, we have!

Also, you do have a malpractice case against this atty if things turn real sour(as in losing the house).  I doubt that would happen under the facts you describe but it woudln't hurt to shop around for a legal malpractice atty while you're at it, just as a preparatory move.  So far it sounds like no harm/no foul.

Also, opening up a case as an "asset case" is routine if the trustee THINKS there MAY be assets to distribute, as they have to file that notice or a "no assets" notice shortly after your 341 meeting.  I had not mentioned this previously.  It proves nothing.  Cases get closed out all the time when they turn out to really be no asset cases although the "asset case/file claims now" notice went out.  Not to worry.

My email address is:    [email protected]

Such discussions are better done off-line via email;  pls put all experts question in the subject line so it doesn't hit the spam.

Lee Horner

Goldstein, Horner & Horner, Attorneys

Tucson, AZ

www.freshstartaz.info