A Massachusetts debt collector along with the creditor has been sanctioned by the bankruptcy court in Florida for violating the discharge injunction. On April 4, 2007 Olson filed a Chapter 7 petition in the US Bankruptcy Court for the Southern District of Florida. On his schedules, he listed a debt owed to Wells Fargo Financial in the amount of $976. Two separate addresses for Wells Fargo appeared on the creditor matrix. His creditor’s meeting was held on May 3 and on July 3 he received his discharge.
In a letter dated March 10, 2008, Nelson, Watson & Associates, LLC in Haverill sent a letter to the debtor demanding payment in the principal amount of $976.71 and with interest, a total balance of $1,353.65. The debt was now purportedly held by North Star Capital Acquisitions. Payment was demanding by the close of business on March 31, 2008. On March 18, 2008, the Debtor moved to report his bankruptcy case, and that motion was allowed on March 31.
On that same date, the Bankruptcy Court issued an Order to Show Cause. The order directed Nelson, Watson & Associates, LLC and North Star Capital Acquisition LLC to appear before the court through counsel on April 21, 2008 to show cause why they should not be held in contempt for making a demand for payment on the debtor. The order was mailed to the CEO of North Star at its New York address and at its agent’s address in St. Paul, Minnesota. It was mailed to Nelson, Watson & Associates LLC at its Merrimack Street address in Haverhill (the order reflects the same address that appears on Nelson’s website).
April 21, 2008 came, and no one appeared. This is a problem for two reasons: (1) it’s a court order and when the court orders you to appear before it, you do so and (2) no one got to hear their side of the story. No even a written statement was field. It was as if they played possum.
You can imagine that this displeased the court. On April 28, the court held Nelson, Watson & Associates, LLC along with North Stat in contempt of court because they failed to attend the hearing and they violated the discharge injunction. Both were ordered to pay fines in the amount of $2,500. If they did not pay their fines by May 30, the court stated that it would issue a separate order directing the US Marshal to APPREHEND David Paris, CEO of North Star and George Nelson, III, Manager of Nelson, Watson & Associates,LLC for the purpose of “bringing [them] before the Court to explain [their] contemptuous conduct and why further sanctions should not imposed.” They were also ordered to obey the discharge injunction.
On May 6 Nelson paid its find and North Star paid on May 13. The case remains open.
As an aside, it takes less than 30 seconds to determine if someone has filed bankruptcy. Debtor’s attorneys routinely do it as part of their due diligence in preparing bankruptcy petitions. Since there is no response from Nelson, we’re all left wondering: did you check and send the letter anyway? or were you just negligent? Without an explanation, we’ll never really know the truth (but I encourage them to chime in and comment if they get wind of this blog post).
In re Olson, US Bankruptcy Court, Southern District of Florida at Fort Lauderdale, 07-12387.
Reactive vs. Proactive
I’ve mentioned that sometimes it’s better to proactive than reactive. Being proactive is calling a bankruptcy attorney when you sense that the barn out back may be a fire hazard. Being reactive is calling a bankruptcy attorney when the barn is burning, you can’t remember where you put the garden hose while you wonder if water bill has been paid.
When clients do nothing until faced with a foreclosure notice, they are being reactive… which unfortunately places me in a reactive posture. After years of doing both, I’m certain that being reactive makes an otherwise average case more difficult and more expensive, because but for a scheduled auction some people would just hope that the finances will get better. But it’s that auction that pushes some people into finally getting their ‘house in order’, albeit quickly… and hopefully not too late. And for one of my clients, getting his house in order was what he wanted me to help them with.
After being retained by a reactive client, one of the first things I did was send a letter off to an attorney representing a lender. I let them know that I was representing the client for a bankruptcy case, and I asked that he please send copies of notices to me so that I may ensure everyone is properly listed on the petition and creditor matrix. A few weeks later, I received a copy of a notice of scheduled auction which I sent off to my client with note reminding him that his petition needed to be filed before the scheduled auction. The letter also reminded my client of the documents and information I needed to ensure that the paperwork was properly completed when filed.
About 10 days later, and about 2 weeks before the auction, the lender’s attorney calls me and leaves me a message. He wants to know if I still plan on filing a petition, since he has to hire an auctioneer, and go through the costs of publishing. He tells me he wants to avoid all of those costs if my client is going to file bankruptcy.
That put me into a bit of a predicament. (more…)
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