Question for a friend

[JeepMom]

As you all know, I'm discharged and 95% recovered (BK is still on CR so not 100%).

My friend and her hubby had their 341 hearing recently. They were told the trustee may file abuse on them. He's questioning medications, dr visits, just general expenses being inflated. They had 6 months of recipts when they went in. Their income is 6 figures of the means test was hard for them and they barely passed.

If the trustee decides they can not file chapt 7 what are the options going to be?

Also, what if they get divorced, divide the debt, can either of them then file chap 7 on their own vs joint? He makes the money, she works part time for min wage.

[FreshLikeADaisy]

JeepMom, at first glance it seems like there are three ways for this to go: they get the Chapter 7 (which you are saying is unlikely), the trustee offers them the option of conversion to a Chapter 13, or their case gets dismissed altogether. Providing there's no actual fraud (also seems unlikely from what you wrote) none of these options are all that bad. If they get dismissed, they should be able to refile in 6 months. If they get into a 13, they can still convert back to a Chapter 7 at anytime their circumstances change and they become (more?) eligible for a 7.

The debt and divorce thing sounds doable, but like much more trouble than it's worth. ESPECIALLY if they live in a community property state. What I would do, if I were them, is go see the atty again and during the consult -- which we would both attend -- I would mention that the $$ trouble has put a strain on our marriage and so we would also like to know what our options are if we divorce. I would NOT tell the atty I was thinking of divorcing in order to have a better bk outcome; that puts him in a very bad ethical position. I would just say that we are thinking of divorcing and would like to know how bk would work out in that situation. This way they can get a straight answer that takes into account their own specific circumstances.

But given what you said about their preparedness for Ch 7 and what they had in terms of documentation, I actually think they have a good chance for a 7 if they've gotten this far. What their atty needs to do is request a specific listing of all problematic figures, and respond to the same in writing. This is not a matter of opinion; the trustee has to have a specific legal reason to deny them a 7. If there is any question of fraud, the UST will get involved too, so it's not just the trustee making this decision, and it's not just whether that trustee doesn't feel like giving them a 7. I have a feeling their trustee may be quite like mine, who was damn sure I had all my i's dotted and t's crossed, but as long as I gave him all requested documentation and straight answers it was good.

Tell your friends not to get divorced just yet. They have a few options left to exhaust. Hope this helps!