lawyer missed 523(a)15 objection deadline


S

smile4camera

In the separation agreement the ex-husband agreed to pay $15k for
equity in the house; he keeps the house. He paid about half then
decided he wasn't going to pay anymore..

Retained a lawyer and fought.. the ex finally filed Chapter 13. This
worked for a year, then he rolled it to a Chapter 7 this past year (Oct
25, 2004 was the 341).

When he rolled it to a Chapter 7 our lawyer told us that it's all
over.. we won't see anything else. I remember researching when the ex
filed Chapter 13 and seeing 523(a)15.

(here it comes..)

I called the lawyer on Dec 23 and talked to the paralegal.. I didn't
have 523(a)15 handy, but mentioned to her that I was sure that there
was something that covered debts other than alimony and child support
WRT Chapter 7.. she told me that she would tell the lawyer all this and
that the lawyer would call me Monday.

Monday comes and goes and I call him on Thursday.. we talk, and he
mentions that 'off the top of his head, he can't think of anything
other than alimony and child support'.. I tell him that I would call
back the following Monday with the law.

Later that night I find 523(a)15 again, and also find out that the
Chapter 7 was granted on Dec 29.

Today (Monday) I call this morning with 523(a)15, talk with the
paralegal who says they will give the message to the lawyer. This
afternoon I call back and talk to the paralegal again, this time
specifically mentioning that all the research I've done indicates that
523(a)15 applies in this case, and that we've missed the deadline to
file an objection... at this point we are playing 'catch-up'

While I've not got any complaints about our lawyer up to this point..
at this point I almost think he's an idiot.

How badly does him missing the date to file objection to discharge
hurt us?..

If we can no longer proceed with the lawsuit with the ex, is the
lawyer legally responsible for missing the objection date?

What can we expect from this point on?
State is NC..

Thanks in advance.

J.
 
Ad

Advertisements

B

Brett Weiss

How badly does him missing the date to file objection to discharge
hurt us?..
Very. It may be possible to retroactively ask the Court to extend the date
for filing objections.
If we can no longer proceed with the lawsuit with the ex, is the
lawyer legally responsible for missing the objection date?
Yes. You would need to bring a legal malpractice action against him to
collect.

--
Brett

*****************************************************************
* Personal Injury/Malpractice Bankruptcy *
* *
* BRETT WEISS, P.C. *
* Attorneys at Law *
* Maryland, D.C. and Federal Bars *
* (e-mail address removed) *
* www.brettweiss.com *
* *
* Small Business Estates & Estate Planning *
*****************************************************************

The Small Print: This response is for discussion purposes only. It isn't
meant to be legal advice and you shouldn't treat it as such. If you want
legal advice, speak with a local lawyer familiar with your state's laws who
can review *all* of the facts and the law applicable to your situation.
*****************************************************************
 
S

smile4camera

Brett said:
Very. It may be possible to retroactively ask the Court to extend the date
for filing objections.
We talked today.. he said that we would have to petition the court to
reopen the Chapter 7 and then object.. he's thinking about $1500.00 to
do this.
Yes. You would need to bring a legal malpractice action against him to
collect.
Speaking as a layperson, what do you think about this?.. I was
thinking a complaint to the Bar Assoc.. I mean, I as the client had to
inform him of the relevant part of the law (523(a)15).

He has admitted that he wasn't aware of 523(a)15.. but he's expecting
us to pay to petition to reopen the Chapter 7. I am going to contact
someone specializing in bankruptcy law at this point.. I guess at that
point I'll find out, but does $1500 seem high for a petition and
objection?.. Looking at some of the firms locally that do bankruptcy,
they are quoting $800 - $1200 to do a 7, and $300 - $600 to do a 13,
plus filing charges.

Thanks for responding..

J.
 
B

Brett Weiss

I would tell him that it's his mistake, and it's his obligation to take all
steps necessary to fix it...for free.

--
Brett

*****************************************************************
* Personal Injury/Malpractice Bankruptcy *
* *
* BRETT WEISS, P.C. *
* Attorneys at Law *
* Maryland, D.C. and Federal Bars *
* (e-mail address removed) *
* www.brettweiss.com *
* *
* Small Business Estates & Estate Planning *
*****************************************************************

The Small Print: This response is for discussion purposes only. It isn't
meant to be legal advice and you shouldn't treat it as such. If you want
legal advice, speak with a local lawyer familiar with your state's laws who
can review *all* of the facts and the law applicable to your situation.
*****************************************************************
 
S

smile4camera

Brett said:
I would tell him that it's his mistake, and it's his obligation to take all
steps necessary to fix it...for free.
Depending on how much it's looking to cost to hire someone else I might
mention that to him, but you understand that I'm not exactly
overwhelmed with his abilities right now..

I mean, come on, I had to tell him about 523(a)15

Can you recommend a bankruptcy firm in the Raleigh, NC area?.. If you
don't mind me asking, what would you charge for filing a petition and
objection?.. I understand you can't do it for me, but just looking for
a point of reference..

Thanks,

J.
 
T

Thoth

Brett Weiss said:
I would tell him that it's his mistake, and it's his obligation to take all
steps necessary to fix it...for free.
One of the rare occasions I think we disagree. If it was possible to
overcome the bar date issue I think it would only be fair to ask the
original attorney to cover the cost of advancing the motion to reopen. The
cost of prosecuting a complaint to determine the dischargeability of the
debt should remain the OP's burden.
 
Ad

Advertisements

T

Thoth

Depending on how much it's looking to cost to hire someone else I might
mention that to him, but you understand that I'm not exactly
overwhelmed with his abilities right now..

I mean, come on, I had to tell him about 523(a)15
Your attorney made an error, but it may not cost you anything. You've done
the research so you know how easy it would have been for your ex-spouse to
defend an allegation that he could afford to pay. You also know your
ex-spouse, so you know how likely it would have been that you'd actually get
paid if you prevailed in the bankruptcy court.

As to the cost of prosecuting a complaint to determine the dischargeability
of this debt: You've read up on the issue so you know what you'd have to
prove, but you probably don't realize that you'd have to put on a trial to
do that. Trials happen only after status conferences, drafting and
responding to discovery, appearing at depositions, drafting motions,
declarations, oppositons, replies, objections, orders, attending mediation,
preparing exhibits, more motions and objections, etc. It'd be very near
impossible to cover attorneys' fees for an issue like you describe for
$1,500. I'd expect attorneys' fees to be many times that amount.

Can you recommend a bankruptcy firm in the Raleigh, NC area?.. If you
don't mind me asking, what would you charge for filing a petition and
objection?.. I understand you can't do it for me, but just looking for
a point of reference..
I don't mean to discourage you. Good luck, and please let everyone here
know how it works out. I'm especially interested in the bar date issue.
 
S

smile4camera

Thoth said:
One of the rare occasions I think we disagree. If it was possible to
overcome the bar date issue I think it would only be fair to ask the
original attorney to cover the cost of advancing the motion to reopen. The
cost of prosecuting a complaint to determine the dischargeability of the
debt should remain the OP's burden.\
Of course I can't speak for Brett, but what I meant (and what I
understood Brett to be saying) is that our lawyer should cover the
costs of returning everything to a position where we were able to file
an objection.. just as if we hadn't missed the filing deadline. Once we
were there we would return to paying customer status for the objection
to discharge filing etc.

Thanks for responding..

J.
 
S

smile4camera

Thoth said:
Your attorney made an error, but it may not cost you anything. You've done
the research so you know how easy it would have been for your ex-spouse to
defend an allegation that he could afford to pay. You also know your
ex-spouse, so you know how likely it would have been that you'd actually get
paid if you prevailed in the bankruptcy court.
Heh.. so you know people like that also?.. said:
As to the cost of prosecuting a complaint to determine the dischargeability
of this debt: You've read up on the issue so you know what you'd have to
prove, but you probably don't realize that you'd have to put on a trial to
do that. Trials happen only after status conferences, drafting and
responding to discovery, appearing at depositions, drafting motions,
declarations, oppositons, replies, objections, orders, attending mediation,
preparing exhibits, more motions and objections, etc. It'd be very near
impossible to cover attorneys' fees for an issue like you describe for
$1,500. I'd expect attorneys' fees to be many times that amount.
I was aware that there would be a hearing, and that the burden of
proof would be on the debtor to show hardship.. once I talk to someone
local about this I'll be in a better position to understand all
involved..

Reading the ex-spouse's bankruptcy filings has always been good for a
laugh... this is an individual who, when we objected to the initial
Chapter 13 schedules with questions about undisclosed assets, filed the
ammended schedules (he was asked to by the trustee) added approx $1300
worth of assets, but total worth went down by over $500 with the
disappearance of a line item for personal tools in the amount of $2000.
No explanation given, they just disappeared.

In the current Chapter 7 schedules (one year after the initial chapter
13) (which weren't available at the Ch 7 341.. we asked what changed
and, after some mumbling their lawyer offered to file an ammended
schedule of expenses) changes from the Chapter 13 filing include
dropping child support in the amount of $424/month, (which he wasn't
paying anyway), different job for less money, wife stopped working,
payments for tools required for work increased from $160/month to over
$350/month (with the addition of another tool company debt, likely
exceeding $6000 incurred while in Chapter 13), started paying into a
401k over $400/month, company car costs of $250/month.. etc.

We don't want his bankruptcy thrown out for abuse.. we only want him
to pay the property settlement..
We'll keep everyone posted..

Thanks for the input..

J.
 
T

Thoth

I was aware that there would be a hearing, and that the burden of
proof would be on the debtor to show hardship.. once I talk to someone
local about this I'll be in a better position to understand all
involved..
It's crucial for you to talk to local counsel.

The burden of proof for this subsection should fall on the debtor becaue of
the way it's written, but according to my research some courts place the
burden on the party objecting to the discharge. Either way, the proceedure
is governed by the Federal Rules of Bankruptcy Proceedure. Those Rules
determine what can be heard as a motion (such as to reopen the case) and
what issues must be resolved by adversary proceeding. Since a complaint to
determine the dischargeability of debt falls into the latter category, the
parties will have all the judicial process at their disposal for the
preparation of their cases. That means the parade of horribles I mentioned
in my last post. And, since subsection (a)(15) puts the financial condition
of both parties at issue, the horribles are exponentially increased.

11 U.S.C. 523(a)(15) provides that a debt is not dischargeable if it is not
of the kind described in paragraph (5) that is incurred by the debtor in the
course of a divorce or separation or in connection with a separation
agreement, divorce decree or other order of a court of record, a
determination made in accordance with State or territorial law by a
governmental unit *UNLESS:* (A) the debtor does not have the ability to pay
such debt from income or property of the debtor not reasonably necessary to
be expended for the maintenance or support of the debtor or a dependent of
the debtor and, if the debtor is engaged in a business, for the payment of
expenditures necessary for the continuation, preservation, and operation of
such business; *OR* (B) discharging such debt would result in a benefit to
the debtor that outweighs the detrimental consequences to a spouse, former
spouse, or child of the debtor; (Emphasis added.)

Factually speaking this subsection creates a nightmare for both parties. It
exposes every penny of income and expense of both parties to scruteny. The
discovery process alone will be so unpleasnt neither party will be able to
consider re-marriage and remain contenant.
Reading the ex-spouse's bankruptcy filings has always been good for a
laugh... this is an individual who, when we objected to the initial
Chapter 13 schedules with questions about undisclosed assets, filed the
ammended schedules (he was asked to by the trustee) added approx $1300
worth of assets, but total worth went down by over $500 with the
disappearance of a line item for personal tools in the amount of $2000.
No explanation given, they just disappeared.

In the current Chapter 7 schedules (one year after the initial chapter
13) (which weren't available at the Ch 7 341.. we asked what changed
and, after some mumbling their lawyer offered to file an ammended
schedule of expenses) changes from the Chapter 13 filing include
dropping child support in the amount of $424/month, (which he wasn't
paying anyway), different job for less money, wife stopped working,
payments for tools required for work increased from $160/month to over
$350/month (with the addition of another tool company debt, likely
exceeding $6000 incurred while in Chapter 13), started paying into a
401k over $400/month, company car costs of $250/month.. etc.
Your ex-spouse will offer the above as proof he can't repay. Without some
evidence to the contrary you'll never get to the issue of whether the
benefit of the discharge is outweighed by the determent you or your
dependents will suffer because of the "or" language of section (a)(15)
highlighted above.
 
H

Howard Goldstein

: The burden of proof for this subsection should fall on the debtor becaue of
{^-523(a)(15)...hg}
: the way it's written, but according to my research some courts place the
: burden on the party objecting to the discharge.

What's your take on 523(c)(1)'s application to this?

If I were debtor's counsel I'd be feeling pretty good about
things... (I'm just sayin)
 
Ad

Advertisements

T

Thoth

Howard Goldstein said:
: The burden of proof for this subsection should fall on the debtor
becaue of
{^-523(a)(15)...hg}
: the way it's written, but according to my research some courts place
the
: burden on the party objecting to the discharge.

What's your take on 523(c)(1)'s application to this?

If I were debtor's counsel I'd be feeling pretty good about
things... (I'm just sayin)
If I was debtor's counsel I'd be looking like a genius. I tell people in
similar situations that it's possible the other side will not figure out
what they need to do in time. And in this case, it looks like Elvis has
left the building.

If I was OP's counsel I'd be trying to figure out how this settlement was in
the nature of alimony, maintenance or support. It might be an especially
good claim for a self-represented creditor. <g>
 
S

smile4camera

Thoth said:
Howard Goldstein said:
If I was debtor's counsel I'd be looking like a genius. I tell people in
similar situations that it's possible the other side will not figure out
what they need to do in time. And in this case, it looks like Elvis has
left the building.
And this is why I have such feelings of love towards our counsel at
this moment.. I was looking over my notes when the ex first filed Ch13
in 2003.. literally at the top of the list was 'is 523(a)15
applicable'..
If I was OP's counsel I'd be trying to figure out how this settlement was in
the nature of alimony, maintenance or support. It might be an especially
good claim for a self-represented creditor. <g>
That is an interesting point.. I don't know if we could use that
argument so late in the game now without having used it before.

If it wasn't for 523(c)1 and having to determine which party would be
more adversely affected I'd say we have a pretty good chance.. but as
I've read in opinions, that section does have a tendency to punish the
creditor who is able to manage their money and has a good job.
We'll see what happens..

Thanks everyone..

J.
 
H

Howard Goldstein

: : > If I were debtor's counsel I'd be feeling pretty good about
: > things... (I'm just sayin)
:
: If I was debtor's counsel I'd be looking like a genius. I tell people in
: similar situations that it's possible the other side will not figure out
: what they need to do in time. And in this case, it looks like Elvis has
: left the building.

I advise much the same thing, couching it in lots of of caveats about
rolling the dice in a 7, are you sure can't fund a 13 and have a nice
super discharge, etc.


: If I was OP's counsel I'd be trying to figure out how this settlement was in
: the nature of alimony, maintenance or support. It might be an especially
: good claim for a self-represented creditor. <g>

That kind of puts the ball in the debtor's court to do the reopening
and deal from the discharge injunction side, doesn't it? What a
difficult one to advise on. Adding to the mix, there were rumblings
out of the 11th circuit about how the 60 day deadline might not be a
drop-dead jurisdictional bar after all, but I haven't dug into it and
not at all certain how I'd try to pick up the pieces at this point. I
like your initial advice that the OP ought to be talking with local
counsel right away.
 
H

heptamycinal

There may be another way of doing this. If the debt is not in the
nature of support but was part of a divorce proceeding it is the
Debtor's duty to file the dischargeability determination, just as in a
student loan. I had a case where the wife-creditor filed a motion in
Virginia Circuit Court (out trial court level) to enforce the divorce
decree AFTER the discharge. It turns out that there is sufficient law
that says a state court can also determine if a debt arising out of a
divorce has been discharged. If the debtor objects to the state
court's actions, he must remove the case to the bankruptcy court
within the appropriate time. I don't have the relevant memoranda at
hand now but I will try to find them and give some cites for the
propositions I stated above.

Dan Glanz
Attorney
Alexandria, VA
 
Ad

Advertisements

T

Thoth

There may be another way of doing this. If the debt is not in the
nature of support but was part of a divorce proceeding it is the
Debtor's duty to file the dischargeability determination, just as in a
student loan. I had a case where the wife-creditor filed a motion in
Virginia Circuit Court (out trial court level) to enforce the divorce
decree AFTER the discharge. It turns out that there is sufficient law
that says a state court can also determine if a debt arising out of a
divorce has been discharged. If the debtor objects to the state
court's actions, he must remove the case to the bankruptcy court
within the appropriate time. I don't have the relevant memoranda at
hand now but I will try to find them and give some cites for the
propositions I stated above.
Collier Consumer Bankruptcy Guide indicates that the obligee has the burden
to file for the determination under (a)(15), but if that rule doesn't apply
to the OP's district she's in much better shape than I thought. Either way,
it sounds like an excellent procedural move to challenge the discharge in
state court, if such a thing is possible in the state in which the OP
resides. I know CA has some issues of concurrent jurisdiction, and it would
be much cheaper to start in state court with a contempt motion and let the
obligor-debtor contemplate whether he has the financial resources to argue
about it. I think the issue is $7,000, so perhaps faced with litigation or
some form of settlement, both sides could agree on an acceptable level of
mutual disappointment.
 
Ad

Advertisements


Ask a Question

Want to reply to this thread or ask your own question?

You'll need to choose a username for the site, which only take a couple of moments. After that, you can post your question and our members will help you out.

Ask a Question

Top