Expert: Mark J. Markus- California Bankruptcy Attorney - 2/25/2010

Question
I have filed for BK CH7 in CA and was discharged in December 2009.
I have a civil lawsuit against an individual since 2006 and there is also a cross complaint in the same case.
The defendant attorney just found out about my BK and told me in court that because I did not include his client and the lawsuit in the BK (and the contract I have with him which I paid him $44K in 2003)that he is entitled to dismiss the lawsuit against his client beacuse my BK is "Fraudulant" and I did not list his client as a creditor and or stated that I have any interest or ownership in his music publishing and the contract. He has asked the court to allow him to file a motion to dismiss and the court told him to wait until next hearing to decide if he can file motion to dismiss.

My BK attorney did not ask me or informed me that I needed to list this lawsuit in BK and the contract I have which is due to expire end of this year. The defendant a music producer never honored the contract and never paid me even a penny. What do I need to do and can his attroney dismiss the lawsuit I have against his client unless I reopen the case? What do I need to do?
Also, If I need to reopen the case Do I have to open it where I filed it or can I file it in another BK Court as I have moved recently to San Jose CA.

Answer
I just want to be clear on the facts:  You are the plaintiff in a lawsuit that was pending when you filed your Chapter 7 case and your attorney said you didn't need to list that on your bankruptcy papers?   If true, that is potentially serious.  What you need to do is probably file a motion to reopen your bankruptcy case for the purpose of adding an inadvertently omitted asset (the lawsuit).  You obviously also need to inform the Trustee in your case of that asset.  I have no idea whether you have sufficient exemptions left to cover the lawsuit, but it is up to the Trustee in your case to either prosecute or abandon (give back) the lawsuit to you.  When you filed your bankruptcy case, the Trustee took over ownership of all your assets, including that lawsuit.  Failure to disclose it is a big deal.

I don't know exactly how this affects the ongoing state court action.  I would inform the judge in your lawsuit case that you will be reopening the bankruptcy case to allow the Trustee to decide whether or not to administer this asset.   But regardless, you absolutely MUST inform the Trustee in your bankruptcy case immediately that this asset existed so he can be made aware of time deadlines (so the case doesn't get dismissed).   If it is dismissed, you can probably file a new case, so it may not be that big of a deal, but the Trustee must be informed, and then you should probably file the Motion to Reopen your case to amend your Schedule "B" (and "C") to include that asset.

http://www.bklaw.com/