My apologies for the long story, but I want to make sure all the information is included to get the most accurate answer:

A few years ago, we had some customers who ran up a large bill for auto repair on their van. We were allowing them to make payments on it. They did well for a while but eventually quit making payments altogether.

One day, the wife called and left a message saying that her husband had died but that she would pay us off as soon as possible. We gave her a few months to grieve but then called her again after no payments had been made. She stated that she would be receiving a settlement from her husband's estate and that she would be in as soon as she received the money. A few more weeks went by and we tried to call her again but her number was disconnected.

We finally found out that she had moved in with her new boyfriend and called their house. We learned that instead of paying us as she had agreed, she traded in the vehicle which she still owed us money for and bought herself a new SUV. When we finally got a hold of her, she agreed to meet with us. She came to our business and signed a document stating that she would make a certain amount of payments, minimum of $200.00, until the balance was paid in full. She gave us her SSN, DL number, phone number, etc. She did very well for the first year; then she started to fall behind on payments again.

We hadn't received anything from her in over a year and she wouldn't return our calls, so we turned her in to collections. We just recently received a letter stating that she is trying to file for Chapter 7 bankruptcy.

So I have 2 questions:
1) She had plenty of money to pay her bills with; she just chose not to do so. By depleting the settlement she received upon her husband's death, would that be considered "failure to explain satisfactorily any loss of assets" which would then prevent her from being granted the bankruptcy?
2) She signed invoices which clearly stated that there was a mechanic's lien on the vehicle until paid in full. By selling the van that she still owed us money for, would that be considered "fraudulently transferring...property that would have become part of the estate"?

1. You should attend the section 341 meeting of creditors and ask her whatever questions your may have; if you go too far, the Trustee may intervene and tell you to schedule a deposition.
2. You forfeited your lien when you gave up possession of the vehicle.

If the mechanics lien was recorded properly, she would not have been able to transfer title of the vehicle to anyone, how was she able to obtain clear title without the loan being satisfied?

Would not the dealer who accepted her trade have had to pay off any balance attached to the vehicle, before they could receive the title?

On the vechile you would have had to apply for a specific lien, and/or not give the vechile till paid.

And yes, first was this an official notice from the court or just a letter from her. But all you can do is attend the meeting and see if they will allow it.

on the vechile you would have had to apply for a specific lien, and/or not give the vechile till paid.

and yes, first was this an official notice from the court or just a letter from her. But all you can do is attend the meeting and see if they will allow it.

It was a notice from the court informing us that she intends to file. They're having the hearing on 06/27 to determine if she is eligible to file. That's why I was asking about depletion of her assets, etc.

Really?

All I have ever received from the court, is the notice of Bankruptcy.

I have never heard of the court sending you a notice that someone is "planning" to file.

I still go back to how the mechanics lien was processed. She should have never been able to trade in the vehicle, without the dealership that is selling her the other vehicle obtaining payoff information, and then, sending the payoff to any lien holder prior to ever receiving the title?

You really got me stumped on this one?

Sorry, I worded it wrong. She filed for the bankruptcy; the paperwork states that there is going to be a meeting of creditors, which she must attend and from what I've found online about Wisconsin law regarding bankruptcy, she has quite a few hoops to jump through before the court will grant it.

As for the lien, all of our customers sign invoices which state this. We don't go to the DMV with every invoice demanding that they place a lien on a vehicle. The "lien" at this point is really irrelevant, I suppose.

Re-read the notice; you have said there is a hearing scheduled 06/27; does the notice refer to a bankruptcy case in a given state, and a hearing at a given location? Is there a bankruptcy case number? As for the depletion of assets, you may know more about this than her attorney because she may not have provided this information. You could write a memo of facts as you know and recall them, and send the memo to the Chapter 7 Trustee, whose name and address should appear on the notice. You may hear the Trustee question the debtor about this; if not, feel free to address the question yourself. The Trustee is relying on the debtor to make a full and complete disclosure of all assets and liabilities. The information you have may turn out to be critical to issues pertaining to the debtor's discharge. Also, if you can spare the time, go to the U.S. Bankruptcy Court where this case is pending; there, you can go to the clerk's office and review her file for disclosed or undisclosed facts that you believe are relevant.

Sorry, I worded it wrong. She filed for the bankruptcy; the paperwork states that there is going to be a meeting of creditors, which she must attend and from what I've found online about Wisconsin law regarding bankruptcy, she has quite a few hoops to jump through before the court will grant it.

As for the lien, all of our customers sign invoices which state this. We don't go to the DMV with every invoice demanding that they place a lien on a vehicle. The "lien" at this point is really irrelevant, I suppose.
The lien is relevant between you and her, but not third parties unless it is filed in such a way as they can be subject to their existence. Third parties must have notice of the lien for it to protect you, the lien holder.

Re-read the notice; you have said there is a hearing scheduled 06/27; does the notice refer to a bankruptcy case in a given state, and a hearing at a given location? Is there a bankruptcy case number? As for the depletion of assets, you may know more about this than her attorney because she may not have provided this information. You could write a memo of facts as you know and recall them, and send the memo to the Chapter 7 Trustee, whose name and address should appear on the notice. You may hear the Trustee question the debtor about this; if not, feel free to address the question yourself. The Trustee is relying on the debtor to make a full and complete disclosure of all assets and liabilities. The information you have may turn out to be critical to issues pertaining to the debtor's discharge. Also, if you can spare the time, go to the U.S. Bankruptcy Court where this case is pending; there, you can go to the clerk's office and review her file for disclosed or undisclosed facts that you believe are relevant.

They won't let me rate you, but this was very helpful. I'll get the letter typed up on Monday. Thank you so much!

Really?

All I have ever received from the court, is the notice of Bankruptcy.

I have never heard of the court sending you a notice that someone is "planning" to file.

I still go back to how the mechanics lien was processed. She should have never been able to trade in the vehicle, without the dealership that is selling her the other vehicle obtaining payoff information, and then, sending the payoff to any lien holder prior to ever receiving the title?

You really got me stumped on this one?



Got to go along with you on this one - the Court is notifying people that someone is "planning" to file in bankruptcy? Not in my area.

I don't how the initial vehicle was sold when title should not have been clear.

Also, what she did with her money in the past is going to have little bearing on the bankruptcy - unless she hid assets. It's what she's doing with the money she now has or intends to get in the future.

Sorry, I worded it wrong. She filed for the bankruptcy; the paperwork states that there is going to be a meeting of creditors, which she must attend and from what I've found online about Wisconsin law regarding bankruptcy, she has quite a few hoops to jump through before the court will grant it.

As for the lien, all of our customers sign invoices which state this. We don't go to the DMV with every invoice demanding that they place a lien on a vehicle. The "lien" at this point is really irrelevant, I suppose.


After this experience I think I'd change my policy -

Unless you are hiring an attorney to attend the bankrutpcy creditors meeting, personally there is little you are going to do yourself, You are going to have to prove she has not meet the conditions and laws to be able to file for bankrutpcy. And it will have to be exact no "ifs" according to the federal bankrutpcy law. Normally no one ever shows up for the meetings, the creditors just let them file. If one happens to be in court being there for someone else, they may attend others but most creditors just don't do anything after being notified except to stop all collection activities

Re-read the notice; you have said there is a hearing scheduled 06/27; does the notice refer to a bankruptcy case in a given state, and a hearing at a given location? Is there a bankruptcy case number? As for the depletion of assets, you may know more about this than her attorney because she may not have provided this information. You could write a memo of facts as you know and recall them, and send the memo to the Chapter 7 Trustee, whose name and address should appear on the notice. You may hear the Trustee question the debtor about this; if not, feel free to address the question yourself. The Trustee is relying on the debtor to make a full and complete disclosure of all assets and liabilities. The information you have may turn out to be critical to issues pertaining to the debtor's discharge. Also, if you can spare the time, go to the U.S. Bankruptcy Court where this case is pending; there, you can go to the clerk's office and review her file for disclosed or undisclosed facts that you believe are relevant.


The Law may have changed but last I knew if you had something to say about a Bankruptcy filing you went in person to the Hearing with your evidence. In my experience the Court would NOT accept information in writing (outside of the proof presented at the Hearing) - the Court WOULD accept Motion papers, of course, if it rose to that level of protest.

Any written info presented at any time had to be sworn, not a letter -

But, again, things may have changed recently.

The Law may have changed but last I knew if you had something to say about a Bankruptcy filing you went in person to the Hearing with your evidence. In my experience the Court would NOT accept information in writing (outside of the proof presented at the Hearing) - the Court WOULD accept Motion papers, of course, if it rose to that level of protest.

Any written info presented at any time had to be sworn, not a letter -

But, again, things may have changed recently.
It may be that this creditor (the OP) knows more about the conduct and the estate of the debtor than the debtor has disclosed. One way to find out is to visit the clerk's office and review the file. Prepare a memo of facts, disclosed and undisclosed, and send it to the Trustee, before the section 341 meeting; it would help to speak with someone in the Trustee's office and let them know what this is all about. The section 341 meeting is an examination of the debtor(s) by the Trustee and other creditors. You will probably see on the notice a date by which time any objections to dischargeability must be filed; I wouldn't go into this process with out a lawyer. While it is lawful for the debtor(s) to file bankruptcy and discharge debts, it is not lawful to fail to disclose income, property, and debts.

It may be that this creditor (the OP) knows more about the conduct and the estate of the debtor than the debtor has disclosed. One way to find out is to visit the clerk's office and review the file. Prepare a memo of facts, disclosed and undisclosed, and send it to the Trustee, before the section 341 meeting; it would help to speak with someone in the Trustee's office and let them know what this is all about. The section 341 meeting is an examination of the debtor(s) by the Trustee and other creditors. You will probably see on the notice a date by which time any objections to dischargeability must be filed; I wouldn't go into this process with out a lawyer. While it is lawful for the debtor(s) to file bankruptcy and discharge debts, it is not lawful to fail to disclose income, property, and debts.


So you are saying that the creditor does not have to appear at the meeting and ask pertinent questions (under the supervision of the Trustee) of the debtor who must answer under oath?

I don't understand the purpose of preparing a memo if the creditor has the right to appear and question the debtor -

I do understand that if serious questions are raised at the 341 a second, more extensive examination may be scheduled.

I also understand that the Trustee is most definitely not amused by frivolous or trivial claims or accusations - thus, the suggestion that an Attorney represent the creditor.

The creditor does not have to appear at the section 341 meeting, but it would be silly not to participate. If a creditor knows that a debt is nondischargeable, appearance at the 341 meeting is not mandatory; but filing a timely objection to discharge is required and a hearing will be scheduled. The objection to discharge better not be frivolous, either.

The purpose of the memo is to assist the Trustee's office in its review and investigation into the conduct of the debtor; the debtor'(s) conduct is always suspect in a bankruptcy hearing.