South Florida Bankruptcy Attorneys Suspended For Filing Frivolous Cl...

A bankruptcy  attorney can try too hard to eliminate his client’s debt; when the attorney abuses the bankruptcy rules he can find himself in trouble with the bankruptcy court. Several attorneys in south Florida were sanctioned for filing frivolous pleadings in Chapter 13 bankruptcy cases. 

A bankruptcy debtor can object to claims filed his creditors in either Chapter 7 or Chapter 13 bankruptcy. The amount and description of unsecured claims is not important in Chapter 7 because all claims are discharged, but the claim amount is important in Chapter 13 because it could affect the amount of plan payments and the length of the plan. 

Some attorneys devised a strategy to object to most creditor claims filed against their Chapter 13 clients. These objections were based upon a general statement that the creditors did not supply adequate documentation supporting the claim and that the debtor disputed the claim amount. Usually, the dispute as to claim amount involved less than $100 and in some cases less than $1.00. The objections were set for hearing. If a creditor attorney filed a notice of prior to the hearing the debtor’s attorney would withdraw the claim before the hearing; if the creditor did not appear at the hearing- as often happened- the claim was stricken. Because the claim objections were withdrawn prior to hearing the bankruptcy judge was not initially aware of the practice. 

At last, the bankruptcy judge caught on to the attorney practice. He said that the debtor strategy amounted to shotgun filings of frivolous claim objects to see what would stick. He said that creditors should not be required to supply extensive documentation of claims for which there is no substantive objection. The court found that filing mass claim objections for “lack of documentation” with no substantive objection and where the debtor admits the existence of the debt is unethical and a violation of bankruptcy rules requiring good faith pleading. 

The bankruptcy court issued on November 10, 2011, and order sanctioning several south Florida attorneys for their pattern of filing frivolous claim objections in Chapter 13 cases which, the court said,  constituted a converted fraud upon creditors and the court.  Case No. 10-49589-JKO. The order is 40 pages long. Several bankruptcy attorneys were suspended from practicing before the court. The attorneys suspended by the court’s November, 2011,  order are: David Marshall Brown, Maite L. Diaz, Jeffrey H.  Tromberg, Rafael Gonzalez, Lloyd A. Baron, and Maylene C. Abad.