Creditor trying to collect after debt was dischaged!!!

[Guest chyna1057]

Is there anyone out there that can help???

Unable to afford a lawyer, I had to file for BK pro se and I think this company is trying to take advantage of the fact that I do not know the laws. Now they were listed in the BK petition, but a week after I received my discharge letter, they send me a copy of the motion to turnover the funds that were levied upon in my bank account. Here's a short version of how it went.

12/30/04-- Bank account levy was placed on my account withdrawing my entire paycheck.

1/04/05 - Consulted with lawyers to find out how to get levy removed and my money back. All of which said I had to file for BK and fast. I couldn't afford a lawyer nor could I afford to make the minimum payments that Pressler was asking for.

1/19/05- Filed for bankruptcy.

2/19/05 - I had my 341 meeting with trustee. Everything went well. No creditors showed. 60 days passed and I never received anything saying any of the creditors were disputing the discharge.

4/25/05- Received my discharge letter in the mail.

5/04/05- received a copy of Pressler's(name of the collection agncy/lawfirm) motion for turnover stating that the discharge lifted the automatic stay and that the levy did not violate the bankruptcy act and was not voided by any bankruptcy proceedings.

How can that be? My question is, is this legal?

On the advice from a knowledgeable person in this area, I filed a motion to vacate with the court and sent them a copy of discharge, copy bk petition, certificate of service, notice, and motion to vacate. I then sent 2 copies of notice of motion & motion to vacate to the agency as advised. Can anyone tell me what else I need to do to make sure these slick crooks don't get around the BK discharge? From what I was able to find out about the company, they are a Lawfirm AND a collection agency.

[DocDon]

You report them to the court.

[LadynRed]

I was kinda hoping that LadyTW could help her a bit on this one. I directed Chyna over here from another board.

Definitely do need to do something, but she has to stop this mess at the Civil Court level first. What you MAY need to do is file a Motion to Strike Pressler's Motion for Turnover. Its pure BS that they think they're entitled to the levy on a discharged debt.

[Guest chyna1057]

Ladynred and any others who'd like to comment.

I finally got in touch with a lawyer willing to hear me out. He looked at my case and said that the amount that they are asking for isn't worth A lawyer getting involved because it's the same amount($1100) that it would cost me to have a lawyer go to court amend the petition and void the judgment. I don't have anything to gain by paying a lawyer to fight the collectors. My main concern was that the collectors were violating the BK discharge and I thought they were trying to get the full amount of $4300. Not just what was levied upon. So at this point, I am willing to let them have the levied amount,since it's been 5 months ago that's this has happened.I'm trying to look at the bigger picture here. I've moved on and I'm not missing it anyways. I just don't want them to be able to proceed on try to collect the full amount. So what do you think?

Should I let it go?

If so, How do I make sure that the levy amount is all that they are asking for? And if it is How would I withdraw the Motion to vacate the judgment?

OR...

Should I continue with the process and go to court respresenting myself and see if I can get it vacated?

I'm just afraid of going to court trying to prove my point when I don't know the "legal jargon" and looking like a fool, wasting my time, and the judge awarding the levy to the collectors anyway because I can't prove what I am talking about.

[LadynRed]

The only thing YOU have to prove to a judge is that the debt that caused the judgment has been discharged in your bankruptcy, and therefore the levy cannot go forward because it would be literally forcing you to pay on a discharged debt. THAT is a violation of the permanent injunction of your discharge.

If it were me, I'd go forward with the action to vacate the judgment and stop them from getting away with the levy. What can you lose ?? If the judge, for some dumb reason, decides against Federal law, and you and lets them have the levied funds, what are you losing ?? If you WIN, you get that money back. I'd make 'em work for it, even though they are NOT legally entitled to it any more.

[Guest chyna1057]

Yeah, I am still considering going through with the process.

Any idea what's to happen next now that I've sent in my motion to vacate the judgment to the courts also, sending the debt collectors a copy?

In addition, the debt collectors sent in their motion to turnover funds to the courts before i got a chance to send mine. Both were received within a week's time.

Just wondering if anyone has an idea.

What are possible technicallities that would cause this judgement to stand?

I notice in my petition, that even though the debt was dischaged, the part in the petition where you have to list all suits and administrative proceedings, I didn't put the Court Name and address, Just the docket number of the case and who was the suer which was the debt collector.

I also neglected to put the date of the seizuer. Will they(collectors) have a leg to stand on because of this? Keep in mind that even still, the part where you list the creditor's information in Schedule F, the debt collect company's Name, address, and amount of claim is listed fully.

[LadynRed]

What are possible technicallities that would cause this judgement to stand?

NONE that I know of. The bankruptcy discharge is pretty iron-clad when you followed all the rules. You included the creditor and the judgment, and the bk code is pretty clear that the discharge makes all judgments NULL AND VOID. Violating the injunction of the discharge is punishable by the BK courts and they pack a pretty good wallop if invoked.

[Guest chyna1057]

Ok Guys! Here we go again.

This CA sent an objection to my motion to vacate the judgement and are requesting an oral argument. They also state in their B.S. letter that they are not disputing my bankruptcy discharge, but what they are disputing is my motion to vacate the judgement. HUH????

Now they are saying that my BK discharge does not void the judgement they won against me because it was a "default" judgment for me not showing up to court and it seems they want an explanation as to why I can't pay. I thought that all that is irrelevant now that this debt has been disharged. I am at my wits end here. I have an appointment with another lawyer tomorrow and I just HOPE and PRAY that these guys will help me. Even if I have to pay the same amount that I am trying to recover.

Is that how this BK thing with judgements works?! Judgements are only voided in a BK if they are not won on a default? Just wondering.

[LadynRed]

Absolutely NOT ! It doesn't matter HOW they GOT the judgment, ALL judgments are VOIDED by the bankruptcy discharge. The BK code makes NO distinction as to how a judgment was obtained -- zero, zip, nada.

This creditor lawyer is full of crap and trying to find a weasel way around the BK discharge which totally bars them from collecting on a discharged debt !!

Sec. 524. Effect of discharge

-STATUTE-

(a) A discharge in a case under this title -

(1) voids any judgment at any time obtained, to the extent that

such judgment is a determination of the personal liability of the

debtor with respect to any debt discharged under section 727,

944, 1141, 1228, or 1328 of this title, whether or not discharge

of such debt is waived;

(2) operates as an injunction against the commencement or

continuation of an action, the employment of process, or an act,

to collect, recover or offset any such debt as a personal

liability of the debtor, whether or not discharge of such debt is

waived;

The key words here being ANY JUDGMENT.

I think what you need to do ASAP is file a motion to re-open your bankruptcy if its already officially closed and then file a Motion for Contempt against these scumbags. They are attempting to collect on a discharged debt !! They need to be stopped and the BK court packs a wallop.

You REALLY need a bankruptcy lawyer on this. I hope this next one will take your case.

Wanted to add the following:

senate report no. 95–989

Subsection (a) specifies that a discharge in a bankruptcy case voids any judgment to the extent that it is a determination of the personal liability of the debtor with respect to a prepetition debt, and operates as an injunction against the commencement or continuation of an action, the employment of process, or any act, including telephone calls, letters, and personal contacts, to collect, recover, or offset any discharged debt as a personal liability of the debtor, or from property of the debtor, whether or not the debtor has waived discharge of the debt involved. The injunction is to give complete effect to the discharge and to eliminate any doubt concerning the effect of the discharge as a total prohibition on debt collection efforts. This paragraph has been expanded over a comparable provision in Bankruptcy Act § 14f [section 32(f) of former title 11] to cover any act to collect, such as dunning by telephone or letter, or indirectly through friends, relatives, or employers, harassment, threats of repossession, and the like. The change is consonant with the new policy forbidding binding reaffirmation agreements under proposed 11 U.S.C. 524 (, and is intended to insure that once a debt is discharged, the debtor will not be pressured in any way to repay it. In effect, the discharge extinguishes the debt, and creditors may not attempt to avoid that. The language “whether or not discharge of such debt is waived” is intended to prevent waiver of discharge of a particular debt from defeating the purposes of this section. It is directed at waiver of discharge of a particular debt, not waiver of discharge in toto as permitted under section 727 (a)(9).

[LadynRed]

There has to be some case law out there, I'll see if I can find any in the 3rd District (covers NJ).

[Guest chyna1057]

Thanks Ladynred!

I came to the same conclusion from what I was able to find on this subject. I'm getting ready to go to my appointment and speak to this lawyer. I am really gonna fall apart if he can't help me. I simply CANNOT go to court without one. These guys are tough and will rip me apart and beat me with my lack of knowledge in this area.

[LadynRed]

Well, there WILL be a judge in the room and unless he/she is a COMPLETE moron, WILL understand that the FEDERAL bankruptcy laws totally TRUMP state AND this creditor is on thin ice. Hopefully this lawyer will help. You would need to take that cite from the BK code and what I gave you of the Senate notes and you should be able to prove YOUR side to a competant judge w/o too much trouble. If we can find you some case law, even better, I'm working on that.

I still think you should go forward with a Motion for Contempt - their own motions and papers to try to collect the levied funds will be more than enough to show a BK judge that they are breaking the law !

[Recovering Attorney]

The issue I see here is this: if the money levied was in the hands of the sheriff on or before your petition was filed, there is a question whether the money goes to the creditor (as it was no longer your money once it was levied) or becomes part of the estate. I don't know how courts view it, but I guess there is some protection for teh creditor, just as a mortgagee can foreclose on the mortgage even if you file a peittion. So I don't believe it is cut and dry.

In this case, it is clear they cannot collect anything beyond what was levied on pre-petition. Your argument is they are not entitled to the 1100.

[ladytw]

I reviewed the comments here...I agree with the previous post...this is going to boil down to the effect in NJ of the levy...if it is a lien on the account, then it was attached pre-petition and although the BK discharges the personal liability for the debt, there was no motion to avoid the lien on the bank account filed in the BK, so it survives the case. I do not know NJ law, and it might be worth a call to your area Pro Bono Committee to see if they can get you a pro bono (free) NJ atty to advise you. Sorry I can't be of more help....I'm a Hoosier Lawyer

[LadynRed]

Thanks to the lawyers for your input !

I guess I'll have to go plough thru the NJ statutes just for my own edification.

[Guest chyna1057]

I spoke to the lawyer and he pretty much said this.

I could reopen my BK case and add the $1100 to schedule C as an exemption and get my money back, but there are a mess of motions that I would have to file to the BK court. To pay a lawyer 1100 to do this, that's what he'd charge, wouldn't be worth it to me. Other lawyer said the same thing. I could go ahead and try it myself and I will probably get my money back, but it's alot of work. If I REALLY need the money, then he suggests I go ahead and try to reopen on my own. If I don't need the money that bad then he suggests to let them continue and get the money becuase it was levied upon before I filed. They are skating on thin ice, but he says that the fact it was done before I filed is how they are able to collect.

I'm not really concerned about the money anymore. I was afraid that they would try to come after me for the rest of the money, which I can't afford. I really couldn't afford to loose that, at the time, but I've made it through that loss. With the help of family, my son and I didn't miss a beat. I was ashamed and infuriated. Then I became scared. But the lawyers said that they can not collect on the remaining balance because it was dishcharged. Which the CA said that they weren't disputing and I have that in writing. Had I protected that money in my expemptions I would'nt be dealing with this now.

So here I am. I think I am gonna suck it up and take this loss. I just want a chance to rebuild my credit and make sure this never happens to me or anyone who's close to me or asked my opinion. I was a young mom, and I still am, fresh outta H.S. when I got out on my own and answered those dreadful credit card "pre approved" offers. This is just another learning experience in my life. Man .....have I had my share!

Tell me what you think?

[Guest chyna1057]

I also wanted to say that you guys are really great here and I am glad ladynred referred me to this forum. What a great bunch of people you guys are and there is SOOOO much helpful info here. I am VERY GLAD i was able to come across this and will refer to it in the future on on road to recovery rebuilding my credit. I am just sorry I had to find this forum and website on my circumstances, but you live and you learn and you get better. It's when you don't learn from your mistakes is when it's a problem.

So thanks again, ladynred,DocDon,ladytw,& recovering attorney. o

Here's one big cyber hug o{ from me!

xoxoxox's from chyna!