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  1. #1
    Join Date
    Jan 2008
    Posts
    6

    Default Re: What Can I Expect As A Creditor, After Debtor's Chapter 13 Filing

    Well, it's been a while, but as you know the wheels turn slowly in bankruptcy court. Here's what has happened to-date:

    I objected to his initial plan in writing, on basis of bad faith and I provided proof of his inability to fulfill the terms of the plan. The debtors attorney responded by simply ammending the plan to the general satisfaction of the trustee. No hearing was called. The creditor's meeting kept getting postponed, and postponed again for various reasons. It actually will be happening (finally) tomorrow.

    So...after I got the ammended plan that had addressed my objections (poorly, in my opinion), I decided I might be spinning my wheels, so I completely changed gears. I figured I was going to have a very uphill battle trying to get his bankruptcy stopped so I could resume trying to bleed my money out of him on my own. Therefore I decided that if his bankruptcy was going to be granted, I had better try to increase my chances of getting a meaningful payment. So I tried a completely different approach.

    I educated myself on section 507 "priority claims" and came to the conclusion that I may likely have a section 507 priority claim for "(7) individuals, to the extent of $2,425 for each individual, arising from the deposit...of money in connection with the purchase...of services for personal, family, or household use, that were not delivered or provided..." After all, I am an individual, I gave him a deposit for services for household use, and he didn't provide what I paid him for, right?

    So...I filed my proof of claim, and checked the box indicating that I wanted priority status. At the exact same time I filed a new objection to his ammended plan based solely on the fact that I had not been listed as a 7th level priority claim. I attached all documentation...my contract, cancelled checks, etc. A month later, I got a notice of a court hearing to discuss only this matter, and I went before the judge today at that hearing.

    I was about 45 seconds into my explanation of the situation, and the judge stopped me before I was done and said my case had caught his eye this morning, and he therefore had thoroughly reviewed all documentation I had filed, and he agreed with me 100%. He asked the debtor's attorney and the trustee if they had any reason to disagree with my objection and they did not. Then the judge ordered the trustee to add me as a level 7 priority claim and to have the debtor sign a second ammended plan showing the change. After that was over and before I left the judge's desk, the judge looked directly at me and asked if I was represented, and how the heck did I know so much about section 507 priority law, and how to use it, if I wasn't represented? I just said I read the law and did some internet research. He said "Young man...I think you may have missed your calling. You knew EXACTLY what you were doing and you did everything correctly, finding a little-used law and making it work in your favor. I'm not sure many of these other briefcase carrying leaches in this room could have handled it as well as you did." The other attorneys in the room laughed at that. I could tell he was a very personable judge and liked to joke around quite a bit. I was surprised how informal he handled that courtroom, and was rather pleased with his compliment.

    Anywho...it seems now I'm sitting much better in this situation. I'm still disappointed that the system appears to be allowing this bankruptcy to go through based on his habitual history, but at least I'm very pleased that all indications are that I will be receiving 100% of my loss back over time, if it is indeed confirmed. I am the ONLY priority claim listed after attorney's fees, so my understanding is that the trustee will disperse money to attorney first, me second, and then pro-rata to all other creditors after that.

    Yeah! It seems I found a way to twist this bankruptcy in my favor. I will not attend creditor's meeting tomorrow, as all of my concerns have been addressed and I'm now officially a priority claim. Now it's just a matter of getting the plan confirmed and hopefully start collecting some payments a bit later. I'm cautiously optimistic that this worked for me.

    Oh...and regarding my mass letter to all creditors, I pretty much got no useful response, and no negative repercussions either. A couple other small time creditors like myself called me back just to vent about what a moron the debtor was and to cry on my shoulder/share their stories, but nothing more.

    So Aimee...if you're still here, I want to sincerely thank you VERY much for your assistance. It did help a ton to just bounce things off you, and I think I've proven that attorney representation is not always necessary for these things. The best advice you gave me was to contact the trustees office and chat with them. This is something I did about 4 to 6 times over the past few months. Every time they were indeed very helpful at explaining what I needed to do, and at what time, in order to follow correct procedures to accomplish what I was striving for. I will fully acknowledge that it sure takes one heck of a lot of prep, education, research, and legwork to pull something like this off without being rep'd. Writing a check to an attorney to rep me would be MUCH, much easier, no doubt. But it's not impossible to go at it solo.

    You've been great, and your advice and experience was a big part of my small victory. Again, thank you!

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