Federal bankruptcy court won’t sanction Chicago attorney

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A federal bankruptcy court in Wisconsin has decided not to sanction a Chicago attorney.

Sondra Lisse, a McFarland resident, had last year submitted an 860-page motion calling for sanctions against the lawyer Kenneth Bach of Johnson Blumberg & Associates, for making an objection to her Chapter 13 bankruptcy plan and naming HSBC Bank in certain pleadings instead of the company it had hired to collect Lisse’s mortgage payments. Lisse alleged Bach’s actions on behalf of HSBC were frivolous, improper and based neither on fact nor law.

Lisse had filed for Chapter 13 bankruptcy five days after her husband had filed for bankruptcy. His case was dismissed for having filed his plan in bad faith. Both bankruptcies were filed after Dane County Circuit Court Judge Juan Colas granted a foreclosure judgement to HSBC on the Lisses’ property in McFarland.

Bach specifically objected to Lisse’s bankruptcy plan on grounds that it did not discuss the fact that Lisse was behind on her mortgage payments on the property by more than $100,000.

In a decision handed down on March 29, U.S. Bankruptcy Judge Catherine Furay declined to impose sanctions on Bach. Foray reasoned sanctions were not warranted because creditors routinely object to bankruptcy plans made by debtors when they call for making modifications that are not allowed to a mortgage creditor’s rights.

She also noted that HSBC, not the mortgage sub servicer, held the note for the property that had been foreclosed on, and so Bach did nothing wrong by opposing the bankruptcy plan and naming HSBC in his pleadings.