Charlotte Bankruptcy Lawyer Bryan W. Stone of Arnold & Smith, PLLC answers the question “Should I file bankruptcy ?”
The American feature film American Sniper is shattering box office records in the United States.
In a bankruptcy courtroom in one state—Indiana—a chief bankruptcy judge has become a different kind of sniper, shooting down a pair of too-old creditor claims and very snippily sanctioning the creditors in the process.
The case involves the bankruptcy of Dennis and Jamie Sekema. After the couple declared bankruptcy, Jefferson Capital Systems and Resurgent Capital Services both filed proofs of claims, alleging that they owned debts the Sekema’s had incurred that were subject to being paid off in their bankruptcy.
In its proof of claim, Jefferson Capital alleged that it had acquired a debt incurred by the Sekemas on May 11, 2001. Resurgent Capital, meanwhile, had acquired a Sears National Bank debt incurred by the Sekemas on December 27, 1998.
Bankruptcies stay legal actions taken against debtors in state or federal courts and force creditors to prove or litigate their claims in the context of debtors’ bankruptcy actions. The actions of creditors—and the substantive rights that underlay their claims—are controlled by applicable state and federal laws. In effect, the bankruptcy courts steps into the shoes of state or federal district courts and apply the applicable body of law when deciding actions or claims of creditors in bankruptcies.
In the Sekema case, Indiana state law controlled the substantive rights of Jefferson Capital and Resurgent Capital. When the Sekemas learned about the Jefferson and Resurgent claims, they filed objections in their bankruptcy case, pointing out that Indiana law imposed a six-year statute of limitations on bringing actions to collect on the kinds of debts on which Jefferson and Resurgent premised their claims. That means Jefferson’s right to bring an action against the Sekemas had expired on May 11, 2007, while Resurgent’s right to bring an action had expired on December 27, 2004.
The bankruptcy court asked Jefferson and Resurgent to appear in court and provide explanations as to why they should not be sanctioned for violating Rule 9011(b)(2) of the Federal Rules of Bankruptcy Procedure. That rule prohibits creditor claims that are “not warranted by existing law or a non-frivolous argument for its extension[.]”
Perhaps Jefferson and Resurgent had good explanations for filing their claims well after the limitations period, and the bankruptcy court’s order on sanctions noted that their claims did not provide any information regarding the last date upon which the Sekemas made a payment. The issuance of a payment to the creditors would have restarted the limitations period, meaning the Jefferson and Resurgent claims could have been resurrected prior to their claim filing.
However, neither Jefferson nor Resurgent showed up for the show-cause hearing, and the bankruptcy court used the opportunity to address what it sees as “A deluge [sweeping] through U.S. bankruptcy courts of late” led by consumer debt buyers (like Jefferson and Resurgent) who “are filing proofs of claim on debts deemed unenforceable under state statutes of limitation.”
In order to get the creditors’ attention and to deter further “frivolous” claim filings, Chief United States Bankruptcy Court Judge Robert E. Grant fined Jefferson and Resurgent $1,000 each.
In issuing the sanctions, Judge Grant wrote (very snippily) that “It does not take a rocket scientist to figure out that December 1998… or May 2001… are well beyond six years before the March 2014 date the debtors filed this case.”
If you find yourself needing the services of a Charlotte, North Carolina bankruptcy attorney, please call the skilled lawyers at Arnold & Smith, PLLC find additional resources here. As professionals who are experienced at handling all kinds of bankruptcy matters, our attorneys will provide you with the best advice for your particular situation.
About the Author
Bryan Stone is a Partner with Arnold & Smith, PLLC, where he focuses his practice on all aspects of bankruptcy, including: Chapter 7, Chapter 11, Chapter 13, home loan modifications and landlord-tenant issues.
A native of Macon, Georgia, Mr. Stone attended the University of Georgia, where he earned a BBA in Banking and Finance, and Wake Forest University School of Law, where he obtained his law degree.
Following law school, Mr. Stone relocated to Charlotte, where he currently serves as Chair of “Bravo!” – a young professionals organization associated with Opera Carolina – and founded the University of Georgia Alumni Association of Charlotte.
In his spare time, Mr. Stone enjoys perfecting his barbeque skills for the annual “Q-City BBQ Championship” and playing softball in the Mecklenburg County Bar softball league.
By Steve Jurvetson from Menlo Park, USA (TED Talk) [CC BY 2.0 (http://creativecommons.org/licenses/by/2.0)], via Wikimedia Commons
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