Bankruptcy Creditor and Identity Theft

[wnc817]

Hello. I was discharged from chapter 7 bankruptcy, in 2007. I have recently learned of a judgment against me, after reviewing my credit report earlier this year. The judgment is for money that was stolen from me via check fraud involving a roommate. I reported the stolen checks, as soon as I learned of them.

This creditor (TCF Bank) was listed on my creditor list, but for my mortgage debt. The account that was used fraudulently was the account from which my mortgage payments were automatically deducted.

I was under the impression that the money would be returned to me, since it was ID theft, and since I had reported it as soon as I had discovered it. I spoke with my bankruptcy lawyer, and he said to send a copy of the discharge to the bank. But how do I deal with the existing judgment? Do I need to reopen my bankruptcy? And do I need to sue the bank for the money, since it was supposed to be returned? My main concern is getting rid of the judgment, but I would like to pursue the money, if I am legally entitled to it. I am concerned that this may affect my employment opportunities.

Thanks,

-Wilson

[despritfreya]

Assuming the theft and the judgment pre date your bk filing:

1st, if you owed $$ to the bank, it had th right to set off funds you had in it at the time of filing. Therefore any money that should have been sent to you due to the pre filing theft would rightfully have been kept by the bank. So, while you can ask for the $$ you might not get it back.

2nd, you do not need to reopen your case. If you were a "no asset" case and the creditor did not have any claim for fraud, willful or malicious injury or some other claim that could have resulted in the filing of a non dischargeability complaint, the debt was discharged even if not listed.

3rd, if you were an "asset" case, any debt not properly listed will never be discharged even if you reopen the case. Reopening the case does not give that forgotten creditor the opportunity to share in the distribution therefore the debt will not be discharged.

4th, assuming you were a "no asset" case there is nothing for you to do to get rid of the judgment. It cannot be executed on and it cannot be renewed. Eventually it will go away. Remember, obtaining a Discharge does not mean you do not owe the debt. It means that the creditor is prohibited from collecting or attempting to enforce the judgment.

Des.

[wnc817]

Thank you for replying. I am still not clear about the judgment. I know that the judgment was entered after I was discharged from bankruptcy. Does that make a difference, even though the debt was incurred before the bankruptcy discharge?

Also, I was under the impression that the bank was required to return any money stolen as a result of ID theft, and that I could only be liable for $20. I am not as concerned with actually getting the money back as not having the judgment. I am unable to open a checking account, and may not be able to get a mortgage, while this judgment is on my credit reports. I did report the theft of the checkbook as soon as I learned of it.

[despritfreya]

I am still not clear about the judgment. I know that the judgment was entered after I was discharged from bankruptcy. Does that make a difference, even though the debt was incurred before the bankruptcy discharge?.

There are 2 things here:

1. If the debt was incurred before you filed and the judgment was entered any time after you filed, the judgment is "void" or "voidable", depending upon what district you filed in. In mine, acts done in violation of the stay are simply "void" and completely unenforceable. Regardless, if the original debt was incurred before you filed bk, I would not worry about it unless the judgment creditor attempts to collect.

2. You raise a concern when you state, "the debt was incurred before the bankruptcy discharge". This tells me that you incurred this debt AFTER your filing date. If that is correct you are stuck. The debt/judgment is enforceable and you need to deal with it. Debts incurred AFTER the filing date are not part of the filing and are not discharged. The date of your Discharge is not relevant.

Also, I was under the impression that the bank was required to return any money stolen as a result of ID theft, and that I could only be liable for $20. . .I did report the theft of the checkbook as soon as I learned of it.

I go back to my initial thought. If the bank was to return the money, the money would have been returned into the bank account. At that point, if you owed $$ to the bank and were in default, it would have had the right to sweep the account, taking the funds and applying the funds to the debt. This is the right to "set off". I am not suggesting that you do not try to get the $$. I am only suggesting that getting the money may be very difficult.

I hope this helps.

Des.

[willipm]

If you are worried about the credit report, can't one just dispute the report? In the "reason" section, state Ch 7 Banruptcy discharged on XX-XX-XXXX. This is probably the easiest way to fix the credit report. I did this and it was removed within 2 weeks.

[wnc817]

The debt was definitely incurred before the filing date. If the judgment is, in fact, void, then how do I convince future creditors of this. For example, I would like to open a checking account. Your post seems to imply that it might be the case that the judgment is "voidable". I would assume that it would not affect my ability to open a checking account, if it were "void". What actions must I take to make the judgment "void"?

I really don't know how they could sue me for the money stolen from me, considering the laws regarding identity theft.

Might my only option be to reopen the case, in order to have that judgement listed under my BK on my credit report?

[despritfreya]

The debt was definitely incurred before the filing date. If the judgment is, in fact, void, then how do I convince future creditors of this. For example, I would like to open a checking account. Your post seems to imply that it might be the case that the judgment is "voidable". I would assume that it would not affect my ability to open a checking account, if it were "void". What actions must I take to make the judgment "void"? Might my only option be to reopen the case, in order to have that judgement listed under my BK on my credit report?

If you are in a jurisdiction where the post petition entry of a judgment is "void" and I do believe that this is a majority of the jurisdictions, I would suggest that you contact the attny for the bank and recommend that he/she takes steps to set aside the judgment and dismiss the suit. (Remind the attny that the continuation of the suit and the entry of the judgment was 1) a violation of the automatic stay prior to the entry of the discharge and 2) a violation of the Discharge Injuction.) This is what I, as the attny for the debtor, would do. Try it. It will probably work.

Des.