A farmer originally from North Dakota has filed a Chapter 7 Texas bankruptcy to halt the sale of his several properties in that state. The farmer, according to a bankruptcy lawyer close to the case, had previously had a Chapter 11 petition dismissed, and was facing forced sale of five properties by a creditor who had previously received a judgment against the farmer. The Chapter 7 will interfere with that sale and could result in the creditor getting less than they bargained for.
Chapter 7 Hurts Creditors
The creditor is upset about the filing, and feels he has been unfairly treated in the proceeding. After the farmer’s Chapter 11 petition was dismissed, the court stated he could not file another Chapter 11 for 180 days; however, the decision said nothing about Chapter 7 filing, and the farmer decided to take advantage of the protections offered under Chapter 7 Texas bankruptcy. The creditor feels that the farmer has taken measures to avoid repayment of his debts that should not have been allowable under the law; he believes that the decision should have prohibited Chapter 7 filing as well. Texas bankruptcy lawyers disagree whether the creditor is right in this belief.
The creditor has been seeking payment from the farmer since winning a $1 million judgment in 2010; the farmer’s long Chapter 11 proceedings, which took nearly three years from filing to dismissal, prevented the creditor from taking action. Then, after the Chapter 11 was dismissed, the creditor attempted to obtain payment through forcing the sale of the farmer’s properties, which the automatic stay provision in Chapter 7 has halted. Now the creditor must sit and watch to see whether they will gain anything from the liquidation and disbursement of the farmer’s assets in Chapter 7. Altogether, the creditor has been made to feel as though he is without power to claim what is owed him under the law, and feels very frustrated.