Judge Stacy Jernigan's Fight Against The New Bottom Feeders
In In re White Stacy Jernigan, the United States Bankruptcy Judge for the Northern District of Texas in Dallas took steps to expose and reel in those that she called "A New Cottage Industry of Bottom Feeders" who try to make a buck off down and out debtors who are about to lose their home after they seek bankruptcy relief.
Earlier in the Debtor's bankruptcy, Judge Jernigan believed she had to lift the automatic stay protecting the Debtor's home. Given that a bankruptcy already existed it was unlikely that the Debtors could stop the foreclosure from taking place. The Debtor's bankruptcy attorney insisted that there was little they could do to stop the foreclosure given that the automatic stay had been lifted.
But, with foreclosure comes lots of mail solicitations promising help. Of the approximately 40 mailings that the Debtors received based on the posting of their home for foreclosure, the Debtors chose a company that represented itself as North American Foreclosure. It what that company and its representatives called "a completely legal procedure" they convinced the Debtors to transfer a 1% ownership of their home to an individual who would file bankruptcy to stop the foreclosure. The the Debtors would pay North American $650 per month until the 1% was paid back (whenever that would happen).
The paperwork selling the 1% of the house to an individual in California was apparently backdated. Then the mortgage company, which was in the process of foreclosing the home, receive notification from the representatives of American Foreclosure that the property was included in the bankruptcy of a Debtor who had then filed bankruptcy in California. The problem, as it turns out, is that the property was not listed on the California Debtor's bankruptcy case, and the Debtor claims she knew nothing of the transaction. She was apparently duped as well.
The Debtors paid a gentleman by the name of David Curtis, North American Foreclosure's local representative, $650.00 for the first payment to begin the process. The Debtors eventually made one payment to the company before their bankruptcy counsel contacted the Debtor's about Judge Jernigan's show cause order.
The Bankruptcy Court, upon learning of the fraud, took immediate action, finding that those associated with North American Foreclosure likely violated various bankruptcy laws, she found that the Debtors were likely innocent parties which were duped, and she order North American Foreclosure, and its representatives, David Curtis and his company, Jireh Capital Services, to appear and show cause why they did not violate the automatic stay provisions of 11 U.S.C. § 362 and are not liable pursuant to § 362(k). The Court confirmed in its Order pursuant to 11 U.S.C. § 362(j) that the automatic stay was terminated in the Debtors' bankruptcy and, in case it was not, she annulled the stay retroactively pursuant to 11 U.S.C. § 362(d). The Court voided the transfer of the 1% to the California bankruptcy filer. The Court reported the actions as possible bankruptcy crimes pursuant to 18 U.S.C. §§ 3057, 152 and 157. The Court provided a courtesy copy of her decision to the Chief Bankruptcy Judge in California and the Texas Attorney General, and the Judge issued a plea to the consumer debtors bankruptcy bar to be mindful of these actions and to warn their client's accordingly.
To date nobody has appeared before Judge Jernigan to show cause as ordered.
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