Just Filed, but the 341 is less than 3 weeks on April 4!

[SinkingFast]

Let the haggling begin!!

Did your attny seem to think the Trustee would come to some sort of Settlement??

Trustees don't necessarily wanna work hard to get money. They'd rather make a quick buck and move on. Unless you happened to draw a real hard nosed person, maybe you'll get a decent Settlement offer??!!

[Retired_Broke]

My attorney said the trustee offered to settle for a reasonable amount. I am supposed to get back to her in the morning.
But it's the principle of the thing that gets me.
I guess I have no choice but to accept his offer.
Or bluff.

[SinkingFast]

You gotta consider your legal fees in this too.

Take a look at your BK filing contract. Chances are, all your attny agreed to do for the fee you paid was file your petition and represent you at the 341. Beyond that, you'll pay extra.

Our attny charges $2K up front to represent a client in an Adversarial. He charges $300/hr for Objections. So how much is calling the Trustee's bluff gonna cost you in additional fees to your attny??

So you gotta keep that in mind.

Plus,........... Can you make Law here?? Are you pushing boundaries of the Code or stepping out on thin air?? If you're pushing a boundary and you win, that's one thing. If you step out on thin air and the Trustee wins, you cough up the whole enchilada PLUS your attny's costs.

I'm thinking from your phrasing, your attny is leaning toward Settle?? 'Cause you said your attny said it was a "reasonable amount".

[tay666]

And we are supposed to think of govenment officials as non-partial and uncorrupt?

See, that is where the problem lies.
You have a wrong assumption.
The trustees job is to get as much for the creditors as possible.
He isn't there to help you at all. That is what your attourny is for.

[spell]

Sorry to hear of your trouble.

By your word choice, "distribution of assets from a partnership" this is an asset issue, not an income from work you're doing. It sounds like he's treating this $18,000 no differently than if it were cash in the bank, or a diamond broach. So, which is it assets or income?

Real estate exemptions aren't all that complex. Is it your residence? Are you using a recent accurate survey?

Chapter 7 is designed to liquidate anything above a bare minimum of personal assets. If you have stuff you need to protect, talk to your attorney about the possiblility of a Ch13 repayment.

It sounds like you were crossing your fingers and hoping for the best. Now they're sticking you with the letter of the law. In one sense, you're back to square one. You get to pick. Do you want to use bankruptcy at all? Do you want ch7? or ch13?

[Retired_Broke]

tay666:
No, I'm not under the assumption that the referee is on my side. But I did expect him to not blackmail me. He is acting on behalf of the creditors, but he also gets a percentage of whatever he can collect. That is a pretty strong incentive.
I believe he has crossed over the line in my case.
spell:
The trustee is treating a "projection" of possible partnership distribution of assets over the next 12 months as though it is an actual asset. He is turning a no asset case into an asset case without any proof that the money will be there from the business to pay me off.
It may, or may not happen. But he is treating it like it's a sure thing, based solely on some pay out to me from the partnership during the last 6 months.
He's trying to get around the fact that partnership assets are exempt.
If he really wants to claim them for the creditors (and himself) he should take control of my share, pay the taxes, and deal with the other partners.
He knows it would be a nightmare for him, diverting his attention away from easy money elsewhere. So he's using my aversion to drawing this out to force me to go along with something the law really doesn't sanction.
As to the real estate problem, the amount of my equity is only $12,500.00 and is totally exempt. What happened is that it was refinanced last summer, and even though there are 2 names on the Gramt Deed, the mortgage company only put my name on the Trust Deed!
The damned referee is claiming that because of this I made a "gift" to the other party of 50% of the remaining amount owing on the mortgage. The stupid loan company simply left the other name off the Trust Deed, and I didn't catch it. The property is still only 50/50 owned by the two of us. Should the mortgage default, the other owner would still be liable for the mortgage to protect her interest. No "gift" was made.
The referee is using this also to blackmail me into "buying back" my now non-exempt interest.
Do you all get the drift here?
It's not what is right, what is the law, but what the referee can get away with.

[Spartan]

I know you probably don't like to hear this. But the fact is, the distribution of profit from the partnership is something the trustee has the right to seize with a charging order. You can go fight him on the rest of the issues. But the distribution from the partnership belongs to the bk estate. Since the trustee/creditors cannot seize the partnership assets, the profit distribution goes to them. That is the remedy offered by the law.

What the trustee is doing, is simply giving you incentives to sign that over and makes it easier for him to do his job. The incentives are nothing but negotiation tactic. No need to get upset over it. It isn't blackmailing. It isn't crooked corruption. What he is saying is, if you make things easy for him to do his job, he will make it easy for you too.


If you look at it from a different angle, you will see that you are not going to keep the profit distribution from the partnership anyway. So, negotiate a deal. Cooperate fully. A win win situation. Save yourself the distress.


"... He is turning a no asset case into an asset case without any proof that the money will be there from the business to pay me off...."

Well, you know that is not exactly true. The business has been making profit distribution and thus they have reason to believe that it should continue to do so in the future. You are NOT exactly a No Asset Case. A partnership shields the asset in the partnership, but not the distribution of profit. That is the law. Thus the law serves you by preserving the partnership and protecting your asset in the partnership. But the law also offers a remedy to the creditors, ie the charging order to seize any profit distribution produced by those protected asset. It aims to be fair.

The trustee is not trying to get around anything. Why do you think YOUR lawyer said "the trustee offered to settle for a reasonable amount." ?

No need to make this into some giant conspiracy scheme by the evil government to rob you.

[Retired_Broke]

Spartan:
I didn't make this clear. It's not the income from the partnership, it's a "potential" buy out of my interest, the assets that I have in the business that are protected, that the referee is after. A small percentage was paid to me over the last 6 months reducing my interest in the partnership, because I needed it to survive. There is absolutely no assurance that the partnership will be able to buy out my entire interest over the next 12 months - the $18,000 we're talking about here - which is what the referee is trying to get his hands on.
I'm perfectly comfortable with paying the creditors out of non-exempt income, should there be any above the medium exemption for this area.
What the trustee wants, is a "potential" distribution of the assets of the partnership to me, and THEY ARE EXEMPT as of now.
No, I don't think there is some conspiracy on the part of the referee.
But there IS the implied threat there that if I don't go along, it could become very uncomfortable for me, the partnership, and putting a timely close to the bankruptcy.
And I just want this to end quickly so I can get on with my life.
He knows this - hence the tactic.

[Spartan]

Well, if you retrieve the asset from the partnership, then it is no longer protected by the partnership. Anything you get out from the partnership, the trustee/creditors can seize. That is the remedy provided by the law.

His threat is just a negotiating tactic. You can negotiate with him. He just presents his position of strength there. If you were in his shoes, you would have said the same thing, as it compells the other party to take the deal seriously.

The situation is, if you play hardball, the trustee will just have to get a charging order against any future distribution from the partnership. And your case will not be closed in any timely fashion. Whether he will scrutinize your other claims of exemption or not, is another matter.


Here is the deal:

The distribution and buyout, solely depend on the partnership agreement. The Trustee/creditors cannot compel a distribution nor a buyout. Some partnerships are specifically structured such that distribution is discretionary and have to be unanimously agreed upon by all partners, rendering any charging order a moot point.

I don't know how your partnership agreement is structured.

What you can do, is offer to settle for a 'reasonable' amount that you can reasonably receive from the partnership. Or make it contigent upon distribution, if he agrees.

You have to offer the trustee something, if you wish to have him drop other matters and close the case on a timely fashion.

It sucks that you have to negotiate not from a position of strength. But you just have to play with the cards you are dealed.


Good luck.

[NYCountry]

I said I would reaffirm on my HSBC/Beneficial so they sent me a letter asking me to very nicely if I would work with them to keep my home, along with a reaffirmation agreement and the interest rate went from almost 22% down to 9.5% and they gave me a new loan with a new 15 year time. Also, there are no hidden costs or hoops to jump through. Did you do a reaffirmation?
Did you know they were taping your conversation? Is it illegal to do this?

[Retired_Broke]

Spartan:
Yes, I intend to take the offer of the trustee. It's the only option right now. But that does not make it right. I investigated everything before I filed. I would have have gone the Chapter 13 route if possible, but my income simply wasn't enough. And that is what is so irritating. The trustee is making this an asset case and forcing me to pay a monthly settlement even though I barely have enough to live on, and will have to make arrangements with the IRS to pay them over the next 6 months. He could care less. He is getting marks for wringing out every last dime from people like me. My attorney is wise to this guys methods. She even warned me that should we get him to expect something like this.
Oh well.
As to the Beneficial/HFC matter, we are waiting for their next move. They have filed a letter of intent, so something will happen.
At this point, what with the forced payback to the trustee, I am thinking about fighting them. Yes I knew they were taping the interview, but they encouraged me to overstate income. I was a fool. What can I say?
I mistakenly thought that business income would revert to what it had been prior to 9/11. I would definitely not have borrowed another dime from anyone had I known the direction this business would take.
And so what is the solution?
Either they, HFC/Beneficial, will be able to take my remaining assets (what's left after the trustee gets his) or I will sign a reaffirmation agreement to pay them back over the next, what 10 years?, with interest, if I live that long. In 10 years I'll be 72 years old.
I'm sorry to say this just before Easter, but they all rot in hell.

[Spartan]

The deal with the trustee is negotiable. You don't have to just take the deal as is. I have seen cases where 'this is the final offer' being tossed around repeatedly, by both sides. The trustee can ONLY receive what the partnership agreement stipulate with regards to distribution of profit and buyout. He cannot compel nor demand the partnership to buy out your interest. Thus, you MAY be able to get him to reach a more reasonable deal. I am just suggesting, as I do not know the details.

He claims there is a potential 'income' from distribution of asset from the partnership. But that depends on if the partnership can actually go through with the distribution. Since you can't get blood out of rock, the trustee cannot get what you don't have.

Make him the offer that if the partnership comes through with it, he can have it. OR, if he prefers, he can take a lower but definite amount ? Let him weight whether it is better to have one bird in hand or to wait for the 2 birds in the bush.

The trustee should have a clear picture of your income. You cannot pay him what you don't have coming to you. The law be damned. You can't get blood out of a rock.





With regards to HFC/Beneficial, you provided ESTIMATED income. It is an ESTIMATED income. It was based on projected business income, not on your salary at the time. It is not the same thing as in lying about your salary income.

Your statement below seems to be a reasonable defence to me.

"I mistakenly thought that business income would revert to what it had been prior to 9/11. I would definitely not have borrowed another dime from anyone had I known the direction this business would take."

[Retired_Broke]

Spartan, thanks for the advice about negotiating with the referee. I will suggest this to my attorney tomorrow morning. We have until April 11 to decide to take his offer - that is when the 341 was continued to. She is a good attorney, but I don't think she's dealt with business bankruptcy a lot
You seem to know a lot about partnerships. Thanks for your input.