Expert: Mark J. Markus- California Bankruptcy Attorney - 5/3/2010

Question
QUESTION: Hello my name is Sharon.  A loan was made to a person in the amount of $ 3,000.00 when they claimed they needed the money to stop foreclosure on their home and them expressing the will to commit suicide.  We had a set repayment date of July 21, 2009 for the loan to be repaid in full.   When the loan was not repaid, I filed a civil suit against the debtor.  The debtor did not respond to the claim and the case was then in default.  A default hearing was called on 4/14/10 where the debtor then notified me and the courts that he had filed bankruptcy, the judge then stated an automatic stay was in effect and she could not enter in a judgment.  I then went to the bankruptcy court filed a motion of adversary, paid $250, took off from work, sent in my proof of claim and all supporting documents, the debtor also received a copy of my complaint and objection, then he turns around and file a conversion to a chapter 7.  My question to you is, what happens to all of the paper worked filed and fees paid prior to the conversion and the meeting of the creditors which was scheduled for May 10. Now I have a new court date of June 2?

ANSWER: You don't state it, but I assume the initial case was filed under Chapter 13.  If you filed a complaint to determine dischargeability of debt in the Chapter 13 case, and the debtor converted to Chapter 7, your adversary case should still be active.  The court should either keep the existing status conference date on your adversary, or continue it to a new date and let you know.  You may want to contact the Judge's clerk to see if anything is happening with that.

As far as the meeting of creditors, there will be a new one in the Chapter 7 case.

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---------- FOLLOW-UP ----------

QUESTION: Thank you for your prompt response. I am sorry it was originally a chapter 13 now converted to a chapter 7. With the chapter 13, I had to file a proof of claim form, and provide all supportive documents because it was an unsecured loan,which I did.  when the chapter 7 notice came, it stated not to file a proof of claim form now and if one was needed they would notify me separately. In addition, there are new trustees listed on the chapter 7, will I have to resubmit all documents previously filed with the chapter 13, or have my claims and request for adversary hearing been dismissed with the new filing of the chapter 7 and that is why they stated they are not requiring any documents from me at this time?

Answer
The proof of claim has absolutely nothing to do with your adversary case.  The proof of claim is used by the Trustee to payout claims in a case where assets are being distributed.  Thus, in a Chapter 13 case you are required to file a proof of claim in order to participate in the payments the debtor is going to be making.  In a Chapter 7 case, by contrast, no payments are made and, unless there are non-exempt assets being liquidated by the Trustee, there will likely be no disbursement and, hence, no need to file a proof of claim.  If you need to file another proof of claim form, you will be instructed.

I believe I already answered your other question with respect to your adversary proceeding.