Sort of unwittingly, I got involved in one of the bigger issues plaguing bankruptcy courts recently: the claim filed in the bankruptcy by the debt buyer without supporting documentation. I objected to a claim filed a client’s case by Roundup Funding, who had never had any contact with my client prior to filing. There were no documents attached showing that Roundup was really the owner of the claim.
Roundup’s response to the objection proffered every argument suggesting it really owned the claim, except an assignment proving that it was the owner of the particular debt in question. This, it turns out, is their M.O., and as I looked, I found $400,000 in claims it had filed in other cases in just this bankruptcy division in the last calendar year.
The Chapter 13 trustee saw immediately what the issue was and supported my objection to the claim, even though the amount of money involved in this particular case was small. Small claims multiplied by enough cases, and there is real money at issue.
The United States Trustee has trumpeted lately that it is interested, not only in debtor misconduct, but in abuse by creditors. The UST responded to my letter on this issue, and professed interest. They then announced their interest in the issue at a gathering of bankruptcy lawyers, as apparent evidence that they didn’t just pick on debtors.
Come the hearing on my objection, the Chapter 13 trustee appeared and advised the judge how this seemingly small potatoes claim hearing had much larger implications. No sign, however, of the UST, who has a governmental mission, supposedly, to police the bankruptcy courts for abuse and attorneys on staff to do the work.
Roundup made a deliberate decision to withdraw its claim rather than appear in court to prove that it was entitled to file the claim. The judge and trustee discussed setting up an omnibus hearing to look at a range of Roundup claims.
Where was the UST? As I walked out of the courtroom, I saw the Assistant US Trustee sitting quietly in the back of the courtroom. Perhaps I imagined her finger in the wind, taking the measure of the situation, before doing anything.
