Question about Voluntary Dismissal

[Bob2457]

So, if my chapter 13 gets confirmed...
All creditors didn’t reaffirm my debts, so instead of let’s saying I owe (I’m making numbers up) 75k, it’s really 40k.
If I voluntarily dismiss, I know I have to still pay the 40k (or however much is left, as those creditors can come after me), but to the ones that didn’t affirm, are they then able to come after me, or has their window closed?

[sophieanne]

I believe the answer is yes the creditors who didn’t file a claim can come after a debtor, as the BK would no longer exist. Also the amount owed to all the creditors would be greater as accrued interest would be added. When you file, interest is no longer added as of the filing day..that changes if you don’t complete the plan.

[justbroke]

If your Chapter 13 is dismissed, then all parties are put back to the date before you filed. The creditors, however, can add the accrued interest plus any expense to the balance. That expense can be all the attorney fees they accrued from the bankruptcy (if provided for in your agreement).

So, a Chapter 13 dismissal "could" lead to those creditors "running to the steps of the courthouse" to get judgments quickly. But those are just my thoughts. Whether that happens or not is too subjective.

[flashoflight]

If you have $75k in debt, but only $40k file a claim, it will be $75k + fees + interest if the ch13 is dismissed. Dismissal means every creditor is back in the game regardless of whether they filed a claim.

If you have a house with equity, it is almost certain to be a race to the courthouse to place judgment liens on your house.
Even with no house, your employment and banking information is in pacer so garnishment will be easier for the creditors.

[Bob2457]

So, I have a lump sum that someone would be willing to gift me. Would creditors be willing to work with me, or would they be thinking sue, sue, sue?
I could probably save more money if they took less but lump sums.
Worst case. I could wait about 6 months and pay off early, but it would be at 100%.

[shipo]

Paying off early doesn't really buy you anything, the way the rules read for a Chapter 13, it stays on your credit report for a total of 7 years from the filing date, regardless of whether you take the full 60 months, or of you hit the lottery and pay all your debt in full after only one day.

[Bob2457]

It buys me freedom. Freedom to start new, start my life over, and better myself financially without the government being involved. You can’t put a price tag on that.

[justbroke]

For what it's worth, the government isn't involved. The Chapter 13 Trustees are regular people assigned as "trustees" over the estate while it's pending. The government -- the court -- is only there to protect you from the creditors. (In a way, act as a referee to settle disputes, and to use their equitable powers to punish creditors that don't follow the law.)

There's some government oversight through the Office of the United States Trustee (UST), but other than that, the appointed "panel" (Chapter 7) and "standing" (Chapter 13) trustees are ordinary citizens. In fact, most of those trustees are attorneys and some are CPAs. Most of the "panel" trustees have a regular practice of law.

Think of bankruptcy "protection" as exactly what the government provides -- a shield. The administration of the case is handled by a panel of trustees or a standing trustee. In some cases, a Chapter 11, you could be a "debtor in possession" (DIP) and actually be the trustee... unless the UST feels necessary to appoint someone else.

I just wanted to clarify how bankruptcy works, in case any one else is lurking or trying to understand.

In a voluntary Chapter 13, you can quit at any time. It's a pay to play system. You want protection, you offer up paying back creditors 100% or you offer to pay all your disposable income. In either case your lawyer or the appointed trustee leverages the power of the court to protect you from creditors.

Additionally, no creditor is required to negotiate with you. You may find that many are willing, and others.. .if they think there is money... will still want it all. In fact, if it's a sizable amount, the creditor may be better off "running to the courthouse steps" to get a judgment and then be in a better (stronger) negotiating position.

[flashoflight]

It buys me freedom. Freedom to start new, start my life over, and better myself financially without the government being involved. You can’t put a price tag on that.

I don't understand how this is true with the exception of paying 100 cents on the dollar. If I were one of your creditors and found out you dismissed, I would sue you to get a default judgment and use the information on pacer to drain your paycheck, drain all of your bank accounts, and put a lien on your house. If you get a new job that is not listed on pacer, there are national databases that most employers submit data to and I'll still drain your paycheck. Oh and if there's nothing to grab, I'll haul you into court with a debtor's exam, ask you to empty the contents of your wallet so I can seize the cash and coins on the spot, ask you where you hide your money and bank under oath, and have an arrest warrant for you if you don't show up. The government will give me a lot of help in draining all of your financial resources against your will. So if you stay in the chapter 13 for the entire duration or pay 100% early, then you get a government shield that creditors almost always can't pierce rather than the creditors screwing you over. I think it's better to get the government's help rather than to have the government help your creditors hurt you. Don't get so hung up in the movement to be free of government interference. It ain't happening.

[sophieanne]

flashoflight - I understand what you’re saying and all I can is I’m glad I don’t have you as a creator. This is only said with sincere humor

[justbroke]

sophieanne I think you meant creditor and not creator.

But flashoflight is being honest. A creditor that sits on their butts -- and doesn't run to the courthouse steps -- will likely have that debt discharged and there's nothing they can do. However, the creditor that ran to the courthouse to obtain a judgment, then filed it as a lien to make it a judgment lien, has more power in a bankruptcy. There are some caveats, but that it was I learned through my time in bankruptcy.

As a creditor and former landlord myself, I now understand the power of the judgment lien.

[sophieanne]

justbroke and flashoflight - whoops..that should've been creditor,not creator. I did totally agree and understand what flashoflight was saying. I really was saying things with a sense of humor. I'm in training for a new job and my mind has been fried for the past couple days. It was one of those things that, although true, makes you smile.

[Bob2457]

I don't understand how this is true with the exception of paying 100 cents on the dollar. If I were one of your creditors and found out you dismissed, I would sue you to get a default judgment and use the information on pacer to drain your paycheck, drain all of your bank accounts, and put a lien on your house. If you get a new job that is not listed on pacer, there are national databases that most employers submit data to and I'll still drain your paycheck. Oh and if there's nothing to grab, I'll haul you into court with a debtor's exam, ask you to empty the contents of your wallet so I can seize the cash and coins on the spot, ask you where you hide your money and bank under oath, and have an arrest warrant for you if you don't show up. The government will give me a lot of help in draining all of your financial resources against your will. So if you stay in the chapter 13 for the entire duration or pay 100% early, then you get a government shield that creditors almost always can't pierce rather than the creditors screwing you over. I think it's better to get the government's help rather than to have the government help your creditors hurt you. Don't get so hung up in the movement to be free of government interference. It ain't happening.

You’re a ray of sunshine.
Was able to have convos today. Looks like it’s all going to work out.

[flashoflight]

You’re a ray of sunshine.
Was able to have convos today. Looks like it’s all going to work out.

Just being realistic, esp for ch13 filers who have jobs and real estate. Many ch13 filers look very collectible to collection agencies and original creditors and won't play ball with you. Good luck.