The Chapter 7 Trustee has sued to recover money paid to you, on your past due bill, by the Debtor in the ninety days before the Debtor filed his bankruptcy. Even though you were paid on a legitimate debt the Trustee can recover this money so that it will available to pay a portion of the total amount owed to all creditors.
You can defeat the Trustee's claim by showing that you were paid in "the ordinary course of business" or that you were paid C.O.D. or that you were paid on a secured debt. In addition, you can reduce the Trustee's claim by the amount of goods that were shipped, but not paid for, during the period after the preference payment.
DEFENDING AN ADVERSARY PROCEEDING TO RECOVER A FRAUDULENT TRANSFERS
The Chapter 7 Trustee can recover property or it's value transferred to you by a Debtor within two years of the Debtor filing bankruptcy to the extent that you did not pay the Debtor the full value of the property that you received.
The rationale is that the transfer reduced the amount of property that the Debtor would have had available to pay at least a portion of his debt to creditors who file claims in his bankruptcy case. You can defeat the Trustee's claim by showing that the transfer was for the payment of a debt owed to you or was property that you paid to another for the benefit of the Debtor, or that it was simply a transfer of title to property that you in fact already owned.
DEFENDING A COMPLAINT TO RECOVER "NON EXEMPT" PROPERTY BY THE CHAPTER 7 TRUSTEE
A Debtor who files bankruptcy will eliminate all his unsecured debt and will be allowed to keep most of his property in order to get "a fresh start". The property that the Debtor is allowed to keep is called "exempt property". Most Debtors own only "exempt property" and so lose nothing in the bankruptcy.
Sometimes the Chapter 7 Trustee will disagree with the Debtor's "Claim of Exempt Property" and file an Adversary Proceeding to recover this allegedly "non exempt" property. Even though the Debtor filed his petition voluntarily he is not allowed to dismiss his Chapter 7 to keep the Chapter 7 Trustee from recovering non exempt property for the benefit of creditors; he must defeat the Trustee's Adversary Proceeding to protect this property.
A Debtor can often defeat an Adversary Proceeding to recover non exempt property by filing amended schedules to characterize and list the item of property under a category that is exempt, e.g. list a vehicle under "tools of the trade" to protect it when other vehicles have used up the vehicles exemption. The Debtor can also obtain an appraisal which shows that the value of the item is low enough to include it in the "wild card exemption".
DEFENDING AN ADVERSARY PROCEEDING THAT SEEKS TO HAVE A DEBT DECLARED "NON DISCHARGEABLE"
If you are a Debtor in bankruptcy a creditor may file an adversary proceeding against you seeking an order that your debt to that Creditor is "non dischargeable" meaning that it will still be owed after the bankruptcy was filed. A recent U.S. Supreme Court case has made it much more difficult for creditors to succeed in having a debt declared non dischargeable.
It is no longer enough to show that you broke a promise or that you were negligent or careless or that you made a false statement or "breached a fiduciary duty". Now it must be shown that you had an actual dishonest mindset when dealing with that creditor.
It should be very difficult for any creditor to win a complaint for non dischargeabilty against an experienced bankruptcy attorney who understands this recent U.S. Supreme Court case.
DEFENDING AN ADVERSARY PROCEEDING BY THE CHAPTER 7 TRUSTEE OR THE U.S. TRUSTEE TO DENY THE DEBTOR A DISCHARGE AS TO ALL OF HIS DEBTS
A Debtor can be denied the discharge of all of his debts if he files schedules that deliberately misstates the Debtor's income or property or debts. This is a very difficult Adversary Proceeding for the Trustee to win.
The denial of the discharge of all debts is known as the "death penalty of bankruptcy". Even deliberate errors and omissions are not enough unless they are extensive and major. It takes a skilled lawyer to present this law to the Bankruptcy Court.
Our office has been successfully representing clients in appeals for over thirty years.
We will immediately seek an order staying the judgment of the bankruptcy court pending a decision by the Bankruptcy Appellate Panel. If necessary we will take your appeal to the Ninth Circuit Court of Appeals in San Francisco.