In the involuntary Chapter 7 bankruptcy case of TRED Holdings, L.P., a few debtors and an attorney learned there is a high price to pay when trying to avoid foreclosure by forcing your mortgage company into a unjustified involuntary bankruptcy.
TRED, a mortgage servicing company had been fighting to foreclose on the property of several borrowers. The debtors felt that the foreclosure on their properties were unjust and decided to fight back. Fair enough. But instead of enlisting the help of a qualified bankruptcy attorney to file for Chapter 7 or Chapter 13 bankruptcy, what do the debtors do? They conspire with an attorney to file an involuntary Chapter 7 bankruptcy against the mortgage company, complete with unjustified claims against the company totaling several hundred thousand dollars. The bankruptcy court found that the involuntary bankruptcy filing was not valid and decided to sanction the attorney and award damages to TRED.
Now instead of saving their home from foreclosure the right way, the debtors in this case are not only losing their homes to foreclosure; but they will need to pay damages to the mortgage company because they tried to “game” the bankruptcy system. Not only that, the attorney (who in his own words, admitted that he was not a bankruptcy attorney) in this forced bankruptcy case tried to blame a paralegal for his wrongdoing; saying that he had no knowledge of the bankruptcy filing. The bankruptcy court didn’t buy it.
Remember, even if you feel that you have been wronged by a mortgage company and are facing an unjust foreclosure, don’t attempt to beat them at “their own game,” because you will lose. Talk to a qualified bankruptcy attorney and find out how you can save your home the right way.