Los Angeles Bankruptcy Law Monitor : Los Angeles Bankruptcy Lawyer & Attorney : Christine Wilton Law Firm : Southern California Chapter 13 & Chapter 7 Bankruptcy, Foreclosure

 Have you heard of Judicial Estoppel?  Well, you need to if someone owes you money and you're thinking of suing while contemplating bankruptcy. The doctrine of Judicial Estoppel generally prevents a party from prevailing in one phase of a case on an argument and then relying on a contradictory argument to prevail in another phase. What this means is that what you disclose on your bankruptcy papers become public record in a legal proceeding; a judicial record.  So, if you're owed money or have a potential creditor harassment suit and you fail to list these potential claims on your bankruptcy papers and later file suit, that subsequent lawsuit can be dismissed on a judicial estoppel theory.

A recent 6th Circuit case, White v. Wyndham Vacation Ownership, 617 F.3d 72 (6th Cir. August, 2010) illustrates this point.  The question presented before the court was whether the failure of the debtor to disclose in her schedules, a sexual harassment claim she had was grounds to dismiss the harassment case on the basis of judicial estoppel.  The court held yes. In this case, the Debtor filed bankruptcy under Chapter 13 but did not list a sexual harassment claim she had against the defendants in this district court action. About a week after the plan confirmation hearing, she file a lawsuit in district court seeking more than $1 million in damages. A month later, the defendants filed a motion to dismiss the harassment case on the basis of judicial estoppel. The Debtor later filed an amendment to her schedules disclosing the case, but not the amount. 

The court cited two  circumstances in which a debtor's failure to disclose might be deemed inadvertent or mistake as:

1.  Where Debtor lacks knowledge of the factual basis of the undisclosed claims; and

2.  Where the debtor has no motive for concealment and an absence of 'bad faith.'

The reasoning behind this important decision is that your creditors should be entitled to any proceeds or the value thereof in your bankruptcy case.  So, while you will likely be able to keep your stuff and claims too, it's wise to disclose potential claims to preserve your right to sue later. Remeber that you sign your bankruptcy papers under penalty of perjury that you have fully disclosed all assets, claims, debts and liabilities, so there's no having it both ways in bankruptcy.

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The foreclosure crisis is heating up in the media.  Last Friday, Attorney General Jerry Brown issued this Press Release saying,

"All lenders should halt foreclosures until they clear up this mess and ensure that the process is fair and complies with California law,"  Brown said. "Bank of America has taken an important step, and the other major lenders should follow its lead."

Brown called on all banks to halt foreclosures here in California, after the GMAC Mortgage deposition of a robo-signer from Florida was exposed. 

Consumer attorneys nationwide have been attacking this problem since the economic crisis began and we're not about to give up.  When it comes to fighting this fraud in bankruptcy, our fearless leader, O. Max Gardner is leading an army of more than 200 attorneys nationwide through his Bankruptcy Litigation Model Bootcamps.  The news has even reached Edmonton where one graduate's case was recently highlighted,  "'Robo signer' ruling gives owners loophole in foreclosure cases."

Other news releases show that, like dominos, other banks are falling in line and halting their foreclosures under the pressure of the media attention being spotlighted on the industry's careless practices.  The  trust of the American people has eroded as the American dream of homeownership turns into our nation's nightmare because of corporate greed.  The question of whether the foreclosure crisis is slowing the economic recovery is addressed at Daily Finance.

The foreclosure crisis has not slowed recovery, it's the denial of the federal government that this is a problem at all that's causing us to sink deeper into economic uncertainty.  Here's another great article that exposes the Rot from Within the Foreclosure Mess.

It's time for the American people to take back our country.  Make your Vote count!  If you suspect fraud, report it!  Call your local bankruptcy attorney and take a stand to stop your dream from being stolen from you.

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Nowadays it seems everyone from big business to celebrities is filing for bankruptcy.  While major corporations are getting government bailouts with our tax dollars, wouldn't it seem fair if we could get a bailout too? 

Sure, you can file for bankruptcy and have many of your debts cleared off your books through a bankruptcy discharge.  But, how do you know if you need to file for bankruptcy?  At what point do you throw up the white flag to your creditors and declare bankruptcy?  Here are 10 signs that are strong indicators that you may need to file for bankruptcy:

1.  You've depleted your savings and are considering cashing out your retirement savings to pay your bills;

2.  You're living on credit cards and your debt increases rather than decreases each month;

3.  Your family has given you loans or bought you food;

4.  You're behind on your rent or mortgage, or are in foreclosure;

5.  You're anxious when the phone rings because the only calls you get are from debt collectors;

6.  You can only afford to pay the minimum payments on your debts and have high interest rates;

7.  You're using the legal loan sharks at those payday advance shops to get cash;

8. You know you have a lot of debt, but don't exactly know how much and you're afraid to look;

9.  Your car is about to be repossessed;

10.  You're being sued and you know you cannot afford to pay for any judgment.

If you, or someone you know is experiencing extreme financial hardship during these challenging economic times, it's important to take action sooner rather than later.  The sooner you discuss your situation with a trusted authority, like your local bankruptcy lawyer, the more likely you will be able to have your debts discharged without having to go broke doing it.  This means that you can save your retirement for retirement and still get out of debt.

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The use of bankruptcy as a strategic move in litigation requires a fine line approach.  Susan S. Davis and Alicia N. Vaz wrote, The Impact of Adversary Filing for Bankruptcy during Civil Litigation , Los Angeles Lawyer (Sept., 2009), from a litigation strategy perspective.

As a debtor strategy, the first inclination in seeking bankruptcy protection is to invoke 11 U.S.C. §362(a), known as the “automatic stay.” The automatic stay operates to stop actions or proceedings against the debtor, the moment the bankruptcy petition is filed with the bankruptcy court.

Before continuing any action against the debtor, a party in a pending litigation must obtain relief from the automatic stay. Within the Central District of California, the party seeking relief from the automatic stay would file a Notice of Motion and Motion for Relief From the Automatic Stay under 11 U.S.C. § 362. You can find the forms here. The likelihood of prevailing on a motion for relief is highly dependent upon the type of bankruptcy action filed by the debtor, whether the bankruptcy court is the proper venue for the action and whether any insurance coverage will be afforded to the judgment.

Other considerations include timing, injunctions, removal, forum, varied jury pools and procedural concerns. Keep in mind that the bankruptcy court is a court of special jurisdiction and simply, is not equipped to handle the more complex and varied cases. Much like the law of insurance, if it should be covered elsewhere, then that is where it belongs.

From a debtor standpoint, be wary of using bankruptcy as a strategy in any civil litigation case because you must file bankruptcy in good faith and the other party will most likely be granted relief from the automatic stay where it would be appropriate for the court to do so. 

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