Michael A. <Temprock@hotmail.com> wrote:I had sued a deadbeat client for breach of contract (trial scheduledfor October 8th). Last week I got a call from his attorney informingme the deadbeat had filed a Chapter 7 Bankruptcy. I had never receivedformal or informal notification of the Bankruptcy and in fact had noknowledge of it until the attorney called.Not from the Court, theTrustee or this attorney.He informed me a Discharge under Chapter 7had been granted that very day.
[debtor's attorney demanded OP dismiss his lawsuit or face
penalties]

This is for discussion purposes only, and is not legal advice. I'm
not a lawyer. If you want legal advice, hire a lawyer.

Well, bankruptcy _does_ place an automatic stay on all pending
actions. But AFAIK that only prevents them from going forward
(discovery, depositions, motions, trial, judgement, etc.). But from
what you say, the bankruptcy is now completed and the debtor has
received a discharge. If your claim had been extinguished by the
discharge, then there might be sanctions for continuing the action
over a debt that no longer exists.

However, one of the rules is that creditors must be listed on the
bankruptcy forms; they are then notified by the bankruptcy referee and
given the opportunity to file their claim and/or appear at the
"meeting of creditors". Then they get a share of whatever assets
are available after satisfying "senior" claims -- usually in the
following order:
1. secured debts, to the extent they can be satisfied by the
security
2. taxes
3. wages/salaries due to employees

If you were truly not listed on the bankruptcy, then ISTM that your
debt was not discharged in the bankruptcy. That would mean that you
could now proceed with your lawsuit, regardless of what the debtor's
attorney says.

There's one other possibility to consider: that you _were_ listed as a
creditor on the bankruptcy papers, but the referee neglected to notify
you about the "meeting of creditors" etc. I'm sure you have _some_
remedy in that case, but I'm not sure what it is -- whether your debt
ends up surviving the bankruptcy, or whether you have to petition the
referee for your "share" of the distribution of assets.

I think you did the right thing by demanding to see a copy of the
bankruptcy petition, lists of assets and debts, etc. And if the
amount you are owed is substantial, I think it would be a good idea
to invest $200-300 in a quick consultation with an attorney to see
what your options are. It's even possible you might get a free
initial consult if you are considering hiring the attorney to pursue
further legal action.

Remember that attorneys are not above lying (to people other than
their client) about what the law says or means. AFAIK this is not
banned by the Bar Association's canons of ethics.
--
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to the republic which it established, one nation from many peoples, promising
liberty and justice for all.