Can someone explain "debt limits"

[anuta]

Yes-- a lawyer is the way to go, no doubt. I had questions about how 13 debts limits worked.

Concerning the scrutiny--can't change the past. Only do better as we move forward. It's hard to think of being scrutinized--but as you say HHM, it will probably be. I don't know what we can do except be honest on the inventory lists and my books reflect our income to the penny. We have old cars (one at over 450,000 miles), little equity in our house--but it is affordale.

We have most of our old cc bills--they don't show travel, furs, rubies and fancy cars. Mostly lots of balance transfers from one card to another, medical and dental debt, food, gas etc. I haven't used my cards in three years--it's all old debt. My husband used one of his cards up till a year ago--gas and food and books for school. The most expensive item he had put on it in the last two years was an ipod shuffle on sale at Walmart for $40.

As to "moxie"--my grandfather would use it in certain situations (: Haven't seen the latest Night at the museum yet.

[falken]

If you exceed the 336,900, then you would not be able to file, period.

You can file, someone would need to object for the case to be dismissed. Unless someone thinks they can get more by forcing you in to an 11 (considering the added legal fees, not likely), they are unlikely to object.

I have seen unsecured up to 400k that have went through. I'm not saying it will work, but it can't hurt to file. If the case gets dismissed because of debt limits you can file an 11.

[justbroke]

You can file, someone would need to object for the case to be dismissed. Unless someone thinks they can get more by forcing you in to an (considering the added legal fees, not likely), they are unlikely to object.

If you exceed the 11 USC 109(e) limits on paper (in your petition), it will be dismissed... no questions about it.

Now, my unsecured is well over the limit, but I didn't get over the limit until I stripped a lien and did a cramdown on a couple of items. Even then, i was prepared to fight, but my Judge had a recent ruling that they first look to the schedules to determine eligibility. If the Trustee, creditor in interest, or Judge thinks that they need to look "beyond the schedules" they do. However, another Judge opined that Congress intended for the process (Bankruptcy) to be adjudicated quickly (See Federal Rules of Bankruptcy Procedure rule 1001) and thus it would not be right for a Chapter 13 debtor to get to the 5th month of their case, only to have it dismissed for a 11 USC 109(e) problem. I agree.

Fed. R. Bankr. P. Rule 1001...

These rules shall be construed to secure the just, speedy, and inexpensive determination of every case and proceeding.

And remember, those limits are for "liquidated" and/or "non-contingent" debts. If you have debts marked as "un-liquidated" and/or "contingent" those don't count in calculating whether you exceed the limit(s). A junior mortgage that you wish to strip off, is "contingent" and/or "un-liquidated" for purposes of the limit. As a matter of fact... until it is actually stripped... it's still "secured" debt, so you list it as "secured". (If you do list it as "unsecured" you would need to mark it as "contingent" because just marking it unsecured doesn't make it so. It is then contingent upon a further hearing or hearings to determine whether it can be stripped.)

(Note: those using Best Case will notice that the program automatically takes lien strips and makes them unsecured debt. Then it tells you that you may have an 11 USC 109(e) limit problem. )

[optimistic1]

You can file, someone would need to object for the case to be dismissed. Unless someone thinks they can get more by forcing you in to an 11 (considering the added legal fees, not likely), they are unlikely to object.

I have seen unsecured up to 400k that have went through. I'm not saying it will work, but it can't hurt to file. If the case gets dismissed because of debt limits you can file an 11.

Maybe you should forward that information over to the two attorney's that wrote one of the most reputable bankruptcy books, so they can make a new edition then. Could you give us some actual case examples that are documented, that show people exceeding the limitation rule, it sounds somewhat far-fetched, unless these courts that allowed are out in the boon docks somewhere.

@ Anuta,

If you are looking to protect certain property, then you should possibly look into doing what's called a Ch.20, its a Ch.7 and then a Ch.13

[justbroke]

Maybe you should forward that information over to the two attorney's that wrote one of the most reputable bankruptcy books, so they can make a new edition then. Could you give us some actual case examples that are documented, that show people exceeding the limitation rule, it sounds somewhat far-fetched, unless these courts that allowed are out in the boon docks somewhere.

(See Above). falken was probably looking at cases where there was contingent or un-liquidated debt on the schedules or claimed. This would surely allow you to exceed the limits.

[optimistic1]

justbroke, when are you planning on going to law school, you are one smart fellow, you could just run one of those bankruptcy mills and practice in FL, and just rule. =)

[justbroke]

justbroke, when are you planning on going to law school, you are one smart fellow, you could just run one of those bankruptcy mills and practice in FL, and just rule. =)

Nah, about 90% of what I post is from experience in my own case. My case is atypical and is right on the limits. It has everything from lien stripping to cramdowns to approaching (and exceeding) limits. It includes relief from stay motions, emergency motions, objections to claims. It included looking at Chapter 11 and Chapter 7. It included studying cases on 401(k) pensions as well.

You name it, I've been through just about everything but a Rule 2004 examination, a dismissal, or a conversion. Even the things I haven't been through, I prepared myself for or watched many hearings just to learn some strategy and procedure.

Would I mind being a lawyer... no. I have considered spending 3 more years in school, but I am in no rush to change careers. (I actually thought of doing intellectual property law years ago when my brother was in law school.)

I wouldn't run a mill anyhow... I'm too nice of a guy. I met such a (bankruptcy) lawyer in my District who is well respected and an all around nice guy. I probably wouldn't make a good lawyer anyhow. While I'm hyper-technical and super-analytical... I think that sometimes gets int he way when you need to be savvy and have a bit of... moxie. (my new word for the day)

[HHM]

Maybe you should forward that information over to the two attorney's that wrote one of the most reputable bankruptcy books, so they can make a new edition then. Could you give us some actual case examples that are documented, that show people exceeding the limitation rule, it sounds somewhat far-fetched, unless these courts that allowed are out in the boon docks somewhere.

@ Anuta,

If you are looking to protect certain property, then you should possibly look into doing what's called a Ch.20, its a Ch.7 and then a Ch.13

It is true, you can actually file a chapter 13 and be over the debt limits, and so long as no one objects, (also, assuming the judge won't object on his own accord), the case can be confirmed. I have only seen it where the debtor was paying back near 100% to unsecureds and was surrendering most of the property that put him over the secured debt limits.

[optimistic1]

HHM is irking me, lol.

Just goes to show you, that even attorneys that write BK books, have no idea what they are talking about, or they just give you the straight facts, without the juicy details of what really can happen. It reminds me of when I interviewed all the fake bk attorneys that pilfer themselves all over the yellow pages, only to just use their paralegal and Best Case to file your BK, without caring about any details.

HHM do you have any documented cases where this has occurred? To me it still sounds far fetched, its a rule, I dont see how it can just be broken, it would be like me trying to file a Ch.7 even though I cant, according to the rules, and somehow slip by the creditors, the trustee and the judge, like someone pulled wool over their eyes.

http://www.************************/...s-part-4-of-9/

[justbroke]

I'm not trying to referee or get between you two... you know who you are... but I have read cases where someone cried foul (on eligibility) after confirmation. The ruling on the motion to vacate order of confirmation was denied. The basis was that once you get to confirmation and are confirmed, 109(e) no longer applies (res judicata). So it is possible that someone isn't paying attention and it gets through. Usually though, if the Schedules show that you are ineligible on their face, the Trustee will catch this and motion for dismissal or conversion.

[HHM]

Since these cases get confirmed, they don't get reported so there is no accompanying legal opinion. Remember, no one objects, or the objection is withdrawn so there is no issue in which to have a hearing. Thus, there is no specific case I can send you too.

You are correct though, section 109 does seem to make it a "hard" requirement. However, these cases are rare, and the circumstances must be right. Most attorneys will agree with the books, that the debt limits are a jurisdictional requirement and therefore you should not knowingly file a chapter 13 that is over the debt limits, but it has been done and the plan can be confirmed.

How about this strategy; Debtor is victim of mortgage scam, so has something like 10 foreclosures. Debtor is an "Asset" Chapter 7 (cash, equity in cars, etc), but because all the mortgages were fraudulent (not because of the debtor), the gamble is that no one dares file a proof of claim and opens up these transactions to scrutiny, and if they do, debtor objects. The idea being, even though debtor is an Asset 7, no creditor files a proof of claim so there is nothign for the trustee to pay out and debtor keeps her stuff.

[justbroke]

Since these cases get confirmed, they don't get reported so there is no accompanying legal opinion. Remember, no one objects, or the objection is withdrawn so there is no issue in which to have a hearing. Thus, there is no specific case I can send you too.

HHM brings up a good point. I've studied many 109(e) cases because I was having that issue.

I did find some in which a party moved to vacate the Order of Confirmation on a 109(e). I've seen those motions denied for either res judicata or just pure, the moving party (creditor/trustee/IRS) should have objected to confirmation, rather than wait.

[HHM]

Why is this even an issue for you Optimistic, according your signature, your not even close to debt limit issues?

[optimistic1]

Its not an "issue" for me, you're right, just something to talk about, and a friendly debate. It was a question, I answered it, last time I checked that's what a forum is.

To the OP,

While these instances may be occuring somewhere in the Land of Oz, I personally would not waste my time trying to see if I could somehow luck out or beat the system, the odds are not in your favor.

[catleg]

How about this strategy; Debtor is victim of mortgage scam, so has something like 10 foreclosures. Debtor is an "Asset" Chapter 7 (cash, equity in cars, etc), but because all the mortgages were fraudulent (not because of the debtor), the gamble is that no one dares file a proof of claim and opens up these transactions to scrutiny, and if they do, debtor objects. The idea being, even though debtor is an Asset 7, no creditor files a proof of claim so there is nothign for the trustee to pay out and debtor keeps her stuff.

HHM, you raise an interesting point here. Given all the fraud that's alleged to have occurred in the mortgage origination process, suppose that the debtor's solution to the "cram down" problem is instead to dispute the debt in bankruptcy court. Would be an interesting end-run around the prohibition on mortgage mods. Can't mod it? OK, then just call it ZERO.