For judgment creditors, judgment debtors filing for bankruptcy is usually bad news. If your debtor has recently filed for bankruptcy protection, yet seems rich, or has hidden certain assets; sometimes it can make sense to do some extra research; just in case there are some discoverable leads to possible current and recent records of your judgment debtor’s actual income and assets. Solid new asset information (with written proof including certified copies of things if possible) might be of interest to the bankruptcy trustee.
Chapter 7 bankruptcy is used as the example in this article, which is my opinion, and not legal advice. I am a judgment broker, and am not a lawyer. If you ever need any legal advice or a strategy to use, please contact a lawyer that knows bankruptcy law.
A creditor’s Rule 2004 examination might be the beginning to finding important additional details related to the assets your judgment debtor, and might help you discover undeclared or severely undervalued assets. Everything depends on finding such assets, and verifying your debtor has failed to list them properly. An example might be if your debtor lists some very valuable items as being worth $200 under “miscellaneous furniture” on their bankruptcy financial schedule.
The best possible way to fight in bankruptcy court to get your documents quickly entered as evidence. When a declaration from the custodian of record is not available, conduct a Rule 2004 exam and during the exam, hand the document to the debtor (or non-party if examination is on non-party) and ask them to explain on the record what this document is, “is this a true and correct copy of your bank account at Bank of America account ending in 2911?” then have the stenographer enter this document as an exhibit of evidence to your rule 2004 transcript. There is no objecting to this later, if indeed you file an objection to discharge, this works very well for impeachment purposes and as evidence at an upcoming trial. Never offer to give your opponent a copy of the transcript, they have to buy one from the stenographer at full price. Debtors typically do not want to spend the money.
When discovery is done on a bankrupt debtor and their assets; your only goal is to find ample evidence of assets not being listed, or being severely undervalued in their bankruptcy assets schedule. If such evidence is found, a creditor or their lawyer may be able to bring this to the trustee’s attention, and perhaps schedule a hearing. Trustees are not paid very much (e.g. $85 per case) but they can get 10% of any assets they find. It is often a good idea to CC the US Trustee and make sure they know.
Once the creditor catches their judgment debtor lying about disclosing their assets to the bankruptcy court, the creditor’s attorney may have the right to challenge all subsequent orders the court makes that permits the debtor to amend their schedules.
In bankruptcy court, the “cards” are usually stacked in the debtor’s favor. In certain cases, the debtor can choose any place in the USA to declare bankruptcy; even if only to make it more difficult for judgment creditors. If you want to change your odds in bankruptcy court, the circumstances must be right; and you or your lawyer must spend a lot, and do a lot of work, to try to change the odds toward your favor.
If it is a fairly large judgment you are trying to save in bankrupcy court, and there seems to be a path to some available assets; it is usually worth doing some research. The best results often require you to spend time gathering and organizing what you already know, or can quickly find out about your debtor; and (for example) then hiring a private investigator and an attorney.
When you have a large judgment and a trail to undisclosed assets; you will need information and documents that prove the assets actually belong in the bankruptcy estate, which usually benefits all creditors. Consider hiring an attorney and also learn about PACER, the information portal to all federal and bankruptcy-related judgment information.
PACER is free for low-volume usage, however you must pre-register an account with them. Consider saving all important documents as PDFs (on a Macintosh, you might have to change the file extension to .pdf), and save them and at least screen shots of important status pages, in a folder. After you register with PACER, you can check there as often as you want. BK court-related things tend to progress very slowly.