Bad news & Question about Converting to 7

[CindyLou]

I know you guys have seen me post about my brother's chp13. Well, bad news. He was arrested last night for DUI, which will be his 3rd offense with mandatory jail time. He was doing so great for the past year after battling a drug addiction. Anyway, to the questions. He was going to be confirmed for chp. 13 on July 11. He was in a 100% payback for unsecured with no secured. Because now he will have no means to pay his 800/month and will likely be in rehab and then jail, he will not be making any more 13 payments (he is paid for July)
a. What happens to the 5000 already paid in to the 13 but not distributed (2000 of that is his attorney's fees, so I know that goes to the attorney) and

B. Will his case be dismissed because he won't pass the means test until at least 4-5 months from now and chances are he will be either in rehab or incarcerated. Does that mean he can't convert?

c. If dismissed, can he then file chapter 7 on the same debts that were in the 13 or would those be exempt from the 7?

d. What about debts incurred between the time he filed the 13 and the time he files the 7. (I am aware that his DUI fines are not dischargable)

Thank you for your help.

[lrprn]

I'm so sorry to hear that your brother's addictions resurfaced. He's in a tough spot now with his Ch 13 since he can't make the payments now.

a. What happens to the 5000 already paid in to the 13 but not distributed (2000 of that is his attorney's fees, so I know that goes to the attorney)

It's possible that not all of the $2000 will go the attorney. Some states and bk districts have set policies around how much of a fee may be kept if the case is dismissed for reasons other than fraud. Michigan is an example - http://www.mieb.uscourts.gov/notices...ssedChap13.pdf . As far as what happens to the other fees, the trustee will take what he/she is due for case administration. I searched but can't find a clear answer about what happens to the remaining funds. Hopefully someone else here may know.

B. Will his case be dismissed because he won't pass the means test until at least 4-5 months from now and chances are he will be either in rehab or incarcerated. Does that mean he can't convert?

He needs to speak with his ch 13 lawyer immediately to let him/her know about his arrest and its consequences. It may be possible that his Ch 13 can be dismissed and then he can file a Ch 7 as soon as his six-month income lookback drops low enough. Depending on your brother's specific circumstances, his lawyer may even be able to argue that the 13 should be converted to a 7 now rather than being dismissed. Only his lawyer knows for sure what the best path to take in his district is going to be.

c. If dismissed, can he then file chapter 7 on the same debts that were in the 13 or would those be exempt from the 7?

As long as the 13 is dismissed without prejudice, he can file Ch 7 on the same debts.

d. What about debts incurred between the time he filed the 13 and the time he files the 7. (I am aware that his DUI fines are not dischargable)

Any new debt incurred between filing 13 and filing 7 are his to pay. You are correct that his DUI fines are not dischargeable if he is able to file Ch 7 - http://bankruptcy.lawyers.com/Debts-...ankruptcy.html Any other new non-secured debts that aren't on this list can be listed for discharge in a Ch 7 when it's filed.

[CindyLou]

Any new debt incurred between filing 13 and filing 7 are his to pay. You are correct that his DUI fines are not dischargeable if he is able to file Ch 7 - http://bankruptcy.lawyers.com/Debts-...ankruptcy.html Any other new non-secured debts that aren't on this list can be listed for discharge in a Ch 7 when it's filed.[/QUOTE]

Can you please clarify, you said they are his to pay, but then at the bottom said they can be listed for discharge in a ch 7.

thank you so much for your response all of your support.

[lrprn]

Can you please clarify, you said they are his to pay, but then at the bottom said they can be listed for discharge in a ch 7.

Apologies for the confusion. Any new debts not on the undischargeable list that your brother has incurred since he filed Ch 13 can be discharged in a Ch 7.

When I said the new debts were his to pay, I was thinking if he doesn't/can't file Ch 7 for awhile, these new creditors will harrass him for payment along with all his Ch 13 creditors since he will lose his automatic stay protection if his 13 is dismissed.

thank you so much for your response all of your support.

Glad to help! Thank you for your support for so many of our members here as well. We are lucky you're here, Cindy!