Won small claims case after defendant's BK case. What now?

[ahava01]

What is the name of your state? Texas

I have sued this contractor for $15,000 out of the $27,000 he got from me and finished the job less than half way, before he decided he was not gonna show up no more. This was 2023 April. After several notifications for returning the portion of money he got from me without doing the work, I sued him in small claims court on October 2023 for the $15,000
Early 2024, he declared bankruptcy and put me in the creditors list. Last hearing I attended via video conference was about a month and a half ago and I was told that I was put down for receiving $1 as a result.
Yesterday, was my small claims court date and he did not show up while I Was in the presence of the judge. I presented my case and explained why I am seeking this partial refund of my money, with the pictures of work he performed and skipped out without completing. Today, I received the PDF copy of the decision from the clerk and I was awarded the $15,000 I was asking for.
My question is, since he put me in the BK case as a creditor, does this nullify my winning this case or do I still have a chance to go after him, to collect my money? I know, in Texas, my chances are pretty slim but I want to know if I have a chance or is this debt of his to me, was written off because of the BK case.
Thanks in advance

 

[Zigner]

What is the name of your state? Texas

I have sued this contractor for $15,000 out of the $27,000 he got from me and finished the job less than half way, before he decided he was not gonna show up no more. This was 2023 April. After several notifications for returning the portion of money he got from me without doing the work, I sued him in small claims court on October 2023 for the $15,000
Early 2024, he declared bankruptcy and put me in the creditors list. Last hearing I attended via video conference was about a month and a half ago and I was told that I was put down for receiving $1 as a result.
Yesterday, was my small claims court date and he did not show up while I Was in the presence of the judge. I presented my case and explained why I am seeking this partial refund of my money, with the pictures of work he performed and skipped out without completing. Today, I received the PDF copy of the decision from the clerk and I was awarded the $15,000 I was asking for.
My question is, since he put me in the BK case as a creditor, does this nullify my winning this case or do I still have a chance to go after him, to collect my money? I know, in Texas, my chances are pretty slim but I want to know if I have a chance or is this debt of his to me, was written off because of the BK case.
Thanks in advance

You violated federal law by continuing with your court matter.

https://www.law.cornell.edu/uscode/text/11/362

 

[adjusterjack]

As well as fraud upon the court.

Sanctions could be imposed if the adversary brings a complaint.

Oh, in case it's not clear yet, the debt is dead. Kaput. As in never see a nickel.

 

[quincy]

ahava01, I have tagged a member of this forum who is a bankruptcy attorney, for review of your thread. Look for a post from @despritfreya.

 

[despritfreya]

@ahava01

1. Is your lawsuit against a human or an entity (LLC or Inc.) or both?

2. Who filed bk - a human or an entity or both?

If you proceed in state court against whomever filed bk you, in fact, did violate the law. See 11 USC 362.

If you obtained a judgment in violation of the law, that judgment is either completely void or it is voidable. I do not know which rule your district follows. Regardless, you cannot enforce it against whomever filed bk.

If you think a human (not an entity) defrauded you in some way, you may have a claim in the bk under 11 USC 523. Unfortunately, there is a time limit to filing such an action and if the last date to file it has passed, you are out of luck.

I recommend you speak to a bk attny in your area. Even if the attny does not generally represent creditors, he/she will know the law.

Des.

 

[zddoodah]

Last hearing I attended via video conference was about a month and a half ago and I was told that I was put down for receiving $1 as a result.

Under what chapter did this person file bankruptcy (presumably either 7 or 13)? What was the purpose of the hearing? Told by whom? Put down on what? Receiving $1 as a result of what? Is the bankruptcy case still pending? Has a discharge been entered?

Yesterday, was my small claims court date and he did not show up while I Was in the presence of the judge. I presented my case and explained why I am seeking this partial refund of my money, with the pictures of work he performed and skipped out without completing. Today, I received the PDF copy of the decision from the clerk and I was awarded the $15,000 I was asking for.

I assume that you failed to inform the small claims judge that the defendant had filed bankruptcy. Correct?

My question is, since he put me in the BK case as a creditor, does this nullify my winning this case or do I still have a chance to go after him, to collect my money? I know, in Texas, my chances are pretty slim but I want to know if I have a chance or is this debt of his to me, was written off because of the BK case.

Assuming you failed to inform the small claims court about the bankruptcy, and assuming the bankruptcy is either still pending or a discharge has been entered, you violated federal bankruptcy law by proceeding with your case and are subject to monetary sanctions. I'll reserve further comment until you provide answers to the questions that I and despritfreya asked.

 

[quincy]

… I recommend you speak to a bk attny in your area. Even if the attny does not generally represent creditors, he/she will know the law.

Des.

I think the above-quoted recommendation by despritfreya is good advice.

 

[ahava01]

Under what chapter did this person file bankruptcy (presumably either 7 or 13)? What was the purpose of the hearing? Told by whom? Put down on what? Receiving $1 as a result of what? Is the bankruptcy case still pending? Has a discharge been entered?

You're right. It is under either one of those but which one I can not remember. And due to this construction mess I am trying to clean up from, I can not find the court documents to tell which number.

The hearing was lead by a mediator I believe, not a judge. And as far as I can remember from that court document, this was the final hearing. I don't know who told this but I think it was the BK attorney of this person, who told me I was put down for $1.

And I have not yet received a discharge document yet.

I assume that you failed to inform the small claims judge that the defendant had filed bankruptcy. Correct?

Incorrect.I did not fail to inform the judge. After explaining him my situation, I told him that I was a creditor in a BK case he filed and last hearing was about a month or so ago, which I joined online and heard about this $1 thing.

Assuming you failed to inform the small claims court about the bankruptcy, and assuming the bankruptcy is either still pending or a discharge has been entered, you violated federal bankruptcy law by proceeding with your case and are subject to monetary sanctions. I'll reserve further comment until you provide answers to the questions that I and despritfreya asked.

 

[Zigner]

What you needed to do was either (a) withdraw the complaint, or (b) ask for a continuance.

Edit: ...and frankly, I'm not sure if (b) would even have been appropriate. Perhaps @despritfreya can give an opinion on that...

 

[despritfreya]

Here is bk law in the 5th Circuit which includes Texas:

In re Jones, 63 F.3d 411 (5th Cir. 1995), citing to the earlier case of Picco v. Global Marine Drilling Co., 900 F.2d 846, 850 (5th Cir.1990)

It is well-settled that "actions taken in violation of the automatic stay are not void, but rather they are merely voidable, because the bankruptcy court has the power to annul the automatic stay pursuant to section 362(d).

And here it is in action in a 2011 case out of the WD of Texas:

In re Stone Creek Vill. Prop. Owners Ass'n Inc., NO. 5:10-bk-54343 (Bankr. W.D. Tex. Jan 31, 2011):

This Court finds as follows: Debtor filed its petition for bankruptcy and provided notice to Respondents on November 04, 2010. The next day, on November 05 2010, a hearing was held before Judge Williams in the 216th District Court sitting in Kendall County, Texas in which Respondents sought a judgment against several defendants for contempt of court. A Contempt Judgment was entered on November 05, 2010 ("the Contempt Judgment") that contains findings of contempt against the Debtor. The finding of contempt against the Debtor for failure to remove encroachments owned by the Debtor is a violation of the automatic stay. The order assessing costs jointly and severally against Debtor is a violation of the automatic stay. The Contempt Judgment is a violation of the automatic stay. The violation was not intentional as defined by 11 U.S.C. 362(k).

Section 362 of the bankruptcy code provides for an immediate stay upon filing of the petition that halts "the commencement or continuation... of a judicial, administrative, or other action or proceeding against the debtor that was or could have been commenced before the commencement of the case under this title, or to recover a claim against the debtor that arose before the commencement of the case under this title." 11 U.S.C. §362(a)(1).

Orders and judgments of a state court that violate the automatic stay are voidable. Jones v. Garcia (In re Jones), 63 F.3d 411, 412 & n.3 (5th Cir. 1995). In order to secure the stay's protections, courts must display a certain rigor in reacting to violations of the automatic stay. Soares v. Brockton Credit Union (In re Soares), 107 F.3d 969, 974 (1st Cir. 1997). As specified in the foregoing findings of fact, the actions and orders of the 216th District Court that violate the automatic stay are held to be void ab initio and without force and effect. Under the supremacy clause in Article 6 of the United States Constitution, the orders and Contempt Judgment issued by the 216th District Court on November 05, 2010 are preempted and are unenforceable against the Debtor in any state or federal proceeding by the principles of collateral estoppel and res judicata. The Respondents may not proceed against the Debtor in post-judgment actions arising from Cause No. 06-150 without leave of this Court while the automatic stay is in place.

The Court does not today reach or need to reach the question regarding pursuit of Cause No. 06-150 and the effect of the Contempt Judgment against third parties. IT IS THEREFORE ORDERED THAT DEBTOR'S MOTION FOR SANCTIONS IS DENIED AS TO THE REQUEST FOR MONETARY SANCTIONS UNDER §362(k) AND GRANTED IN ALL OTHER THINGS.

(Emphasis added.)

So, if OP continues down the path of violating the automatic stay, he/she could be in real trouble. Again, OP should be discussing this with a local bk attny.

Des.

 

[zddoodah]

I did not fail to inform the judge.

So...you informed the judge that the defendant was a debtor in a pending bankruptcy action, but the judge nevertheless proceeded to enter judgment? I find that very difficult to believe. I hope there was a court reporter present to corroborate your assertion that you told the court.

What you needed to do was either (a) withdraw the complaint, or (b) ask for a continuance.

Edit: ...and frankly, I'm not sure if (b) would even have been appropriate.

There would be no reason to "withdraw the complaint." The normal procedure when a state court is notified that the defendant has filed BK is to stay the case and schedule a review hearing a few months and require that the plaintiff advise the court at that time regarding the status of the BK.

Again, OP should be discussing this with a local bk attny.

Yep.

 

[Zigner]

There would be no reason to "withdraw the complaint." The normal procedure when a state court is notified that the defendant has filed BK is to stay the case and schedule a review hearing a few months and require that the plaintiff advise the court at that time regarding the status of the BK.

Thank you for clarifying the actual process. I was hoping someone would, because I knew that, while I may have been in the ballpark, it certainly wasn't the right way to say it