REAL close to the maximum unsecured debt limits

[AC135]

I am really really close to the unsecured debt limits for chapter 13 - as a matter of fact - depending upon what document the latest collection agency sent me the numbers (the amount of debt owed) .. is all over the map.
If I use the last most reasonable doc - I am under the limit.. but they have seemed to jacked up & added an inordiate amount of extra fees & costs..depending on who the debt was sold to last....

So I am ready to file chapter 13 - & using the best numbers I have I am under the $360,475...

what happens if the unscrupulous collection agencies dispute it & tack on all the extra fees .. and if goes higher than the limit? I am worried..

will in then need to convert to chapter 11 or chaper 7 ?

we are under water on our home - but have somehow gotten our mtg modified. we haven't touched a credit card in over a year... so I know we can manage - without credit..

just want to file 13 - not 7 or 11...
advice greatly appreciated.

thanks

[HHM]

Need more info. Are your factoring in the underwater portion of your mortgages into the unsecured debt (the court WILL)?

Generally speaking, so long as you made a good faith effort to estimate the debt, the amounts on the filed petition will control for purpose of debt limits, not the later proof of claims that get filed.

But, if you are close, you may have a problem with chapter 13 eligibility.

[AC135]

unsecured debt

No - I am not factoring the amt underwater - the first mtg is fine - depends on the appraiser - but we should be okay - the second is not considered - it is $80K -..more than the $360,475, which is all credit card debt...
so if we include the second mtg then we don't qualify - but I didn't think I had to do that to file chapter 13

thanks again... read all your threads before - appreciate the insight!

[NoTomatoCan]

You mention "we" in your first post. Are you married? If so, is all of your debt joint? If you are married and have some individual unsecured debt you can always both file separately.

This is what my wife and I had to do. We each have pretty sizeable student loans and were collectively over the (at the time) $336k unsecured debt limit by about $60k. Separately though we were both under the debt limit. While the BK law doesn't allow to "double up" the debt limits if you file jointly, it also doesn't prevent you from getting the full debt limit benefit if you file individually.

The funny thing is, the trustee didn't want to have to deal with the two nearly identical plans separately, so they actually suggested that we consolidate. So we gladly did (since two plans were a pain). Now we are in a consolidated plan with about $410k in unsecured debt.

There is a case out of Missouri (I believe) called In Re: Werts that is on point.

Just something to consider in case your situation calls for it...

[HHM]

No - I am not factoring the amt underwater - the first mtg is fine - depends on the appraiser - but we should be okay - the second is not considered - it is $80K -..more than the $360,475, which is all credit card debt...
so if we include the second mtg then we don't qualify - but I didn't think I had to do that to file chapter 13

thanks again... read all your threads before - appreciate the insight!

The underwater portion of the 2nd mortgage WILL be counted toward your unsecured debt. So, the other issue appears to be moot.

[AC135]

unsecured debt too high

almost all of the unsecured debt is NOT joint - and I am married...

so we could file separately???

- but we are in washington state - and I have been told its common law - so its all joint whether we like it or not...

does anyone know about that? thanks

[HHM]

I think you mean a "community property" state.

It really depends on when the debt was incurred and whether you received a benefit as a result.

If the debt is "pre-marital", then it is arguably separate debt. If the debt was incurred while married, then it is a bigger problem. Not sure how this particular issue (BK code section 109 debt limit) plays out in a community property state, but I am sure there is a BK attorney you can find in your state that knows.

[AC135]

community property state -

The debt was mostly incurred as part of a business I was running.. which only I am named on - however all debt was incurred while married.

I will search forums to see about comunity property states.... had/have an atty - but he is worthless... he disagrees withhimself between meetings - interviewed a couple others..

I am trying to figure out - if I should negotiate some debt down - to get it below the limit & then file in January....

[HHM]

Given those facts, I think you are fighting a losing battle. Since you received the benefit of the debt, it is arguably community debt and I am not sure how you can truly separate it out. However, if this debt is mostly "business" debt, why a chapter 13. Could you qualify for chapter 7, either normally, or as a non-consumer case.

[AC135]

over debt limits

there is personal & business debt -

I guess we could do a chaper 7 for the business.. and then a chapter 13 for the personal.. (chapter 20).. that would definitley separate it out.

we want to keep the house.. and the business... the business is faring welll - maintaining a small income & covering all expenses - we would need to close the business if we did chapter 7 wouldn't we?



I am in the midst of negotiating the second mortgage... so that would not need to be put into the debt - I am not looking to actually strip it.

heavy sigh... I just am trying to avoid chapter 11 - its hard to find a local lawyer who will (or can) actually take on a small business 11 - as well as - the amount of complications & cost - seems hard... If we can fit into a 13 that would be the best..

any suggestions - are welcome.

If we declare 13 - and then go over the limit- does it get thrown out.. or does it just convert to chapter 11 -

we are at about 354,000 of unsecurred - without the second mtg... again - I am not planning on trying to lein strip - jut negotiate the second to a reasonable amount.

thanks

[catleg]

Sounds like you should consider a ch 7 non consumer, or a ch11 if you are high income/high expense and trying to keep your home.

Supposedly there are some lawyers now offering cookie cutter chapter 11's on the cheap, like around $10k.

Ch11 allows you to cram down your car and devote your income to secured creditors (your house) in preference to unsecureds.

The unsecureds get double screwed cause the legal fees effectively come out of their share.

[HHM]

You will probably need a more sophisticated lawyer anyway, but if the only reason to a 13 is to save the house, then you should consider doing a 7 first, wipe out what can be wiped out, and then file a 13. But there are risks with that strategy.

[justbroke]

As a non-consumer (business) Chapter 7 filer, who received his Chapter 7 discharge the hard way... via a Chapter 13, please pay attention to what HHM writes above. Do not go into a Chapter 13 if you don't need to. Sit down with an experienced bankruptcy/asset protection attorney and run the numbers.

I had 11 USC 109(e) debt limit problems as well, but was under by about $2K (yes, literally just $2K). I scheduled $200K in unsecured debt but more came in! Plus, my $113K second filed a claim too, bringing me in the $334K range (when the debt limit was $336K). I was starting to study about Chapter 11s!!!

[AC135]

if I file 7 - non-consumer business only?

1. do I need to close the business ( I'm a sole owner - but an LLC).

2. is the house (held jointly - no liability tied to the house) - at risk

3. wont most of the Credit card companies come after me - since they are "implied" as personally guarenteed? or is it just that after the 7 they might do that -

thanks

[justbroke]

1. do I need to close the business ( I'm a sole owner - but an LLC).

An LLC is a separate "legal" entity. You would not need to close it, but you could face issues since the business itself can't discharge debt. It's complex, and is why an attorney would be appropriate if you that LLC has assets.

2. is the house (held jointly - no liability tied to the house) - at risk

Is it a "tenancy by the entireties"? It could be protected and if you're in a State like Florida or Texas, it is protected from creditors.

3. wont most of the Credit card companies come after me - since they are "implied" as personally guarenteed? or is it just that after the 7 they might do that -

Exactly what I imply above. Your personal Chapter 7 will get rid of your personal guarantee, but will not discharge the LLC's debt. They can't come after you personally, but the LLC would be exposed.