Here's an oddball situation for everyone to ponder. Creditor is making a fuss over how a portion of our debt is being treated; Essentially secured vs. unsecured. They are trying to have our CH13 case dismissed based on the fact that our CH13 debts would be over the debt limits. Attorney advises that we could then file a personal CH11. We are told this is very expensive, but family members are so miffed at how the creditors are handling this, they have offrered to help with those costs. Can a CH13 be converted into a CH11? Also, I have read that in a CH11 if one creditor refuses to go along with the debtors proposed plan, it can still be confirmed by the trustee if it meets certain criteria. Essentially, the same ones needed as for approval of a CH13 plan. Additionally, I also read that all debts are dischargeable in a CH11! Is that true? If so, that would sure seem to put a dent in our creditor's AP they filed in CH13. They want to have there debt ruled non-dischargeable. Any comments or suggesstions? Just seems that if we can get help to swing the CH11 costs, it may elliminate some of the issues we have in CH13. Let me know your thoughts and ideas. Thanks and God Bless!
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Yes, you can convert from 13 to 11, that code section is 1307(d) which authorizes it.
Regarding discharge of debt, there is no meaningful difference between an 11 and 13. They are essentially the same but for the debt limit issue. So, whether the AP will continue in an 11 depends on to what this creditors is objecting (the reason for the objection). If its some sort for fraud (the common one), then a chapter 11 isn't going to change that. Generally, conversion from 13 to 11 is a bad idea. You should fight to stay in a 13, or just convert to 7. In most cases, whatever you are trying to accomplish with a 13 or 11 ends up failing and you end up in a 7 a year or so down the road. -
Highlife -- I am in the early stages of a personal Chapter 11 (filed Jul-10, plan delayed due to difficulty valuing debt - main creditor sold the mortgage on an asset - not my personal residence - to another company after I filed which took quite a while). I hope to have plan approved and confirmed by 3Q11. Agree with above post that switching to Chp11 would be a big hassle but if you are forced into it should not change your payment. Disposable monthly income would be the same - payment should be the same. Don't know what is the advantage for creditor???
HHM - Not sure I agree all chp 13/11 are destined for failure - there are plenty of folks on this board that were successfully discharged. That being said, I would be happy to be pushed into a chp 7 - I do not qualify, I have a high income and would pay far more in a 11 than if "forced" into a 7 by a creditor.Comment
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There is nothing wrong with switching. In fact, if you are over the 109 limits and want to reorganize you have no choice. 109 is a “jurisdictional” requirement. You simply cannot be in a 13 if you are over the debt limits. You would file a Motion to Convert, a hearing would be held, the Judge would say "ok" and your attorney would upload the Order. Upon conversion you would get a notice to pay the $765.00 conversion fee. You would then begin the process of being your own trustee.
Chapter 11's work just fine if you don't mind the additional paperwork that you will have to deal with. You are the Trustee therefore you have certain duties that you must perform. Once you get comfortable with those duties the 11 is not a big deal. And yes, depending upon whether or not you have an impaired class, creditors can vote but your attorney will figure out how to get an impaired class so voting will most likely not be a factor. Lastly, any debt that would be deemed non-dischargeable under 11 USC 523 is also non dischargeable in the context of an 11. The AP either would proceed or a new one would be filed based upon a new "bar date".
Des.Comment
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HIghlife, please let us know how this turns out - as Des knows well :-) there may be a similar situation with my spouse's Ch 13...we're scraping just below the 13 limits, BUT I think the atty overvalued (so to speak) one account which may give us some...more room...at any rate the only thing that scares me more than anything about the 11, is that I've no idea how I'd afford the additional lawyer's fees...I don't know if mine would allow the rest of the $$ to be put in plan...but let us hope (haha coming from me)...
And a question - is an UNSECURED creditor trying to say that you're treating something as SECURED that "should" be unsecured so they can dismiss your case??Comment
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Remember that any extra legal fees come out of the estate's pocket -- this means the unsecured creditors are paying. If I understand correctly, at least.
The AP is a separate matter.filed chapter 13..confirmed...converted to chapter 7...DISCHARGED!Comment
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Categorizing certain debts, especially mortgage loans, as secured or unsecured is a much-litigated area. Different jurisdictions hold different ways on some types of debts. As you said someone told you, a Chapter 11 is way more expensive for attorney fees than a 13. Therefore I'd battle to get your debts categorized the way you want, assuming that you have a case for it at all.Comment
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1. That assumes the estate has money to pay.Originally posted by catleg View Post
2. There is still going to be a substantial upfront charge to get an 11 moving.
Note, chapter 13's have a pretty high failure rate, chapter 11's, even MORE SO. I can practically guarantee that whatever you are trying to accomplish in your chapter 13/11...something will change in a year or two, or you will come to a realization that it wasn't worth it, and you will end up converting to 7. (granted, this assumes you could qualify for a 7, but if you have debt limit issues in a 13, that is almost always due to non-consumer style debts). So, I think a real heart to heart is needed, and whatever you are trying to save should probably be surrendered and just file a 7 and become as debt free as possible.
Or, fill us in with more detail and maybe we could provide more insight.Comment
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Just the tax issues alone seem like a nightmare in a personal chapter 11.
At least in chapter 13 you don't create a separate entity for income taxes.filed chapter 13..confirmed...converted to chapter 7...DISCHARGED!Comment
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