Trustee Blog

Conversion of Assets

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In a recent case with Judge Houle, Debtor hid the vehicle  Ms. Frazer was trustee. Creditor sued under 523 and 727.  Creditor obtained a default  and Judge Houle talked about conversion and the entry of default procedure.  Judge Houle writes in his tentative ruling:

· On August 2, 20xx, the Request for Entry of Default was properly served on Defendant. Defendant does not have counsel in the adversary proceeding; however, the Request for Entry of Default was served on Defendant’s counsel in the main case, Debtor’s attorney.

·  On August 9, 20xx, the Notice of Entry of Default was served by the clerk of court on Defendant.

·  The Motion for Default Judgment, Docket #12, was properly served on Defendant and was served on Defendant’s counsel in the main case. 
Procedural Background:

Motion for default judgment filed, Docket # 12

Background:

On January 26, 20xx, Plaintiff obtained a judgment in Superior Court of California, County of Riverside, against Defendant in the amount of $45,480.03.

On March 29, 20xx, Defendant filed for chapter 7 relief. On June 30, 20xx, Plaintiff filed a complaint against Defendant. Plaintiff provides in the Complaint, that it is a nonprofit, mutual benefit corporation. Plaintiff is listed as a creditor in Debtor’s schedules. Plaintiff provides that Debtor borrowed $28,134.00 to purchase a 20xx Nissan Frontier 2WD (the “Vehicle”). The loan was secured by the Vehicle. Plaintiff alleges that Debtor defaulted on the payments, but continued to retain possession of the Vehicle and refused to return the collateral or disclose the location of the Vehicle to Creditor. On or about July 20, 20xx, Plaintiff filed a lawsuit against Debtor in Superior Court, County of Riverside. On or about January 1, 20xx, the state court entered judgment in favor of Creditor and against Debtor in the amount of $45,480.03. Plaintiff provides in the Complaint that this debt is nondischargeable and that discharge should be denied.

The deadline for filing of an answer was July 31, 20xx. No answer has been filed. Default was entered against the Defendant on August 9, 20xx.

On August 20, 20xx, Plaintiff filed their Notice of Motion and Motion for Default Judgment seeking judgment in the amount of $45,480.03, plus interest and costs after judgment against Defendant (“Motion”). Service was proper and the Motion is unopposed.

Practice Pointer:

If your client is sued, advise them to file an answer or a default will be entered.

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