Expert: Mark J. Markus- California Bankruptcy Attorney - 7/29/2011

Question
QUESTION: Hello,
My husband and I will be filing Ch.7 We were delayed because we were behind on our mortgage payments and wanted to get caught up so that we could avoid foreclosure as long as we make our payments. We also wanted to avoid reaffirming the mortgage. On 07/28/11 we were served a limited civil summons by a law firm representing Citibank/credit card. We have 30 days to respond. If we file Ch.7 before the 30 days period expires, do we still need to file an answer with the court? Does the civil suit pick up were it left off after the automatic stay is over? We reside in Riverside county California.
Thank you.

ANSWER: You don't ever need to file an Answer if you're going to be filing a Chapter 7 case, unless it's going to be a while before you file.  Assuming you get a discharge in your Chapter 7 case, the debt will be discharged and there would be no suit to pickup at that point.  In fact, they are required to dismiss the lawsuit upon the filing of your bankruptcy case.

The only thing you want to be careful of is that you don't want them to get a judgment against you before you file the bankruptcy because they could put a lien against your home.  That's probably not a big problem, since you could probably get it removed in the bankruptcy case, but it's an additional step and additional cost.  Thus, if you're not going to be filing your case for a few months, filing an Answer in the state court matter could buy you some additional time on that.

Mark J. Markus, Attorney at Law
Handling exclusively bankruptcy law cases in California since 1991.
http://www.bklaw.com/
Follow Me on Twitter:  @bklawr

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

QUESTION: Thank you, you've been very helpful. I have some follow-up questions. Do we notify the court (in writing or by telephone) about the bankruptcy filing so that the lawsuit gets dismissed, or do we have to wait until after we get the discharge? In the summons paperwork there's a notice of order to show cause hearing scheduled for 11/01. Would we need to appear if we don't have the discharge by then? Also, we are considering trying a mortgage modification with our mortgager (Wells Fargo - we only have one mortgage) prior to filing to lower our payment to no more than 31% of our gross monthly income. If we pursue this we could possibly get it done before 11/01, but not before the 30 day window expires. If we delay filing until we get the mortgage modified should we submit an answer to the court? If so, what happens when we file after sumbitting an answer to the summons, but before the notice of order hearing? Should we mention in our answer anything about waiting for our mortgage modification and our intent to file for bankruptcy? Again, thank you for your help.

Answer
Once your bankruptcy case is filed, you should file a Notice of Stay in the state court action and provide fax notice to plaintiff's counsel.  Your attorney should do that for you, but if you don't have an attorney you need to learn all the rules and procedures.  

As far as what to put in the Answer, I cannot advise you on that as I do not practice in state court.  Depending on the amount of the claim, you can probably file a simple form Answer and just check a couple of boxes.   The point of the Answer is merely to prevent default from being taken and extend the time you have before they get a judgment.  It doesn't really matter what else it says in there, except that you deny all allegations.

Mark J. Markus, Attorney at Law
Handling exclusively bankruptcy law cases in California since 1991.
http://www.bklaw.com/
Follow Me on Twitter:  @bklawr