Happy_Ira and the US Trustee. UPDATE! 707(b)!!

[happy_ira]

Hi all. Been a few days since I posted, here's an update. Although the BK Trustee had no issues with my case and was about to say case closed, the US Trustee requested specific documents at my 341, which I promptly shipped to him. After his review, I checked PACER and see he filed this on the following day:

"The United States Trustee has reviewed all materials filed by the debtor and has determined that the debtor's case is presumed to be an abuse under Section 707(b). Filed by U.S. Trustee. filed by [UST Trial Attorney] on behalf of United States Trustee."

A few things of note and many questions. PLEASE PLEASE as many people jump in with comments, especially the experienced paralegals, lawyers and those who hang out on the boards.

There is an adjournment date set for me and the US Trustee to meet again. What happens on this date? I still feel as though I submitted all the documents supporting my spending and means test, and my case is actually stronger now because of a correction the US Trustee suggested (401k loan deduction). Nevertheless, he thinks there is a presumption for abuse. My guess is that, for ht emost part, I have a very high income and so it would be a super red flag for him not to push hard on this.

Is he trying to dismiss it altogether (ridiculous!) or merely (hopefully) convert to Ch 13? Do I get to sit down at a table with him and discuss the valuation points of a Ch 13 plan? Or does the govt plan on litigating for some reason? I am fully ready to litigate, but it would prove expensive for both me and the govt (but the govt probably doesn't care).

Not sure how I'd come up with the funds for my attorney to litigate who would cost me "a small fortune", so if anyone can suggest how I get legal representation or a lawyer who can help for cheapo, please advise. Actually, I am fine representing myself, I just get a bit confused abotu filing the forms. But in terms of being composed, articulate and all points on hand, I am excellent. However, I wonder if I go before a bankruptcy judge in one of those enormous courtrooms and the government has a super-gorilla lawyer, how could I possibly stand up to her/him!?

Anyone else here have experience with 707(b) presumed abuse? Anyone else here have ANY comments of any nature???

Yikes.

[jessegirl]

IRA - I am so sorry that you are having this trouble. You just cannot catch a break. I really wish you luck. what does your attorney think? Goodluck.

[BROKENN]

Hi HIra, Well, I saw your other post about going it alone and now I think you should find someway to keep paying for your lawyer. I hope HHM chimes in, he's around today.

Just wanted to say HI. And keep this up top for others to see! My thoughts are with you.

[happy_ira]

Yes - I'm going to try to keep up with my atty for now. Anyway - any thoughts on the issue at hand with 707(b)?

[TEW]

Yes - I'm going to try to keep up with my atty for now. Anyway - any thoughts on the issue at hand with 707(b)?

IRA
you may want to PM one of the MODs and ask them to comment

[laurannm]

Sorry to hear about this IRA..but all is not lost.

707(b) usually means that the UST is questioning something on your means test, which judging by the fact that you have another meeting with the UST already scheduled, you may have already known.

The UST has 10 days after your original 341 date to file his statement of abuse (such as what you see on Pacer), and then has 30 days from that point to either file a motion to dismiss your case\force you into a Ch 13, or he can file a declination (meaning the UST will allow your Ch 7 to proceed).

It's quite possible that once you have provided everything the UST asks for, and answered any additional questions he/she may have at your meeting, they will issue a declination and allow your Ch 7 to proceed.

Try not to panic just yet...easier said than done, I know . The best thing for you to do is to be prepared to defend any and all of your calculations on the means test by gathering up as much documentation as you can.

[Yankeegirl]

What EXACTLY is the UST questioning? Your attorney should be able to tell you. Have you met with him to determine your "game plan"?

We, too, battled the UST on presumption of abuse. While your total income plays apart in the battle, he/she isn't going after you just because you are a high income filer. It has to do with the numbers on the means test.

In our situation, we knew exactly what the UST was questioning. We worked with/through our attorney to answer and address the questions. We choose to fight, and unfortunately, lost.

In our case, the items/facts that the UST questioned were "gray" areas of the law that had not been decided in our district. The only way to address them was to take it to a judge. If that is your case, you DEFINITELY want an attorney. And yes, it was very expensive!

[JRScott]

[JRScott]

If you are representing yourself at this point you could call his office and ask what his specific objection is, otherwise if lawyer still in picture you could have the lawyer call .

[happy_ira]

If you are representing yourself at this point you could call his office and ask what his specific objection is, otherwise if lawyer still in picture you could have the lawyer call .

Will he say, or can he wait until the adjournment date?

[JRScott]

I'd hope he'd tell you but I can't guarantee

[biotechsolution]

Here are some questions:

What is the mean for your family size in your state?
What is your total income?
Are you claiming child care expenses with a parent not working?
How much?
Are you above all the IRS allowed expenses?
By how much?

Just because someone passes the worksheet for the means test it
doesn't mean they can't find a 707)(b) objection. Like I said in earlier
posts, if your income is quite a bit higher than the means tests you are
going to have to explain everything.

The only reason the UST would object at this point is he believes that you
have excess income to pay into a Chapter 13 plan. He thinks your expenses are too high and he doesn't believe you can justify them to a judge.

The reason your attorney is going to want a lot more money is because he should research cases in your circuit for over mean, high income fliers to see what expenses the court will allow. Then use all that he researches in your hearing.

Did the UST file this motion after you supplied him with all the paperwork he requested?? or afterward?? If it was afterward, then that's not a good sign because he doesn't believe your expenses will stand up with the judge.

You need to research similar cases and try to find some where the judges agreed with the debtor. They need to be in the same circuit to really count, judges don't pay attention to what other circuit courts do.

What the bankruptcy trustee did really doesn't matter at all because he was just looking for assets, not that you had the ability to repay your debts.

What the UST is saying that even through you've showed on paper that you pass the means test they still believe that you have the ability to pay back some of your debts because your expenses are too high. You will be given the option of converting to a 13.

Ask the UST just how much he expects you to be able to pay in a Chapter 13?? If it's $200/month might be worth it to get rid of the 2nd mortgage.

[happy_ira]

My comment.

What is the mean for your family size in your state? What is your total income?

The state Mean is $100k; my income is twice that at $200k.

Are you claiming child care expenses with a parent not working? How much?

Yes. I have childcare expenses with a parent not working, because a) I have a disabled sick child and b) I have 4 other kids my wife takes care of. I can document that the insurance company was covering *weekly* childcare expenses of $2,000(!). Since the time the insurance benefit 'ran out'; I have had to pay it on my own. Fortunately I can find someone in NYC to do it off the books for $2,000 per month. The child needs therapies, she receives SSI (a meager $30 per month), has had two eye surgeries and is developmentally disabled. (While I emotionally feel it is wrong that I have to justify this, I understand "why" and will do so before a bankruptcy judge if it comes to that.)

Are you above all the IRS allowed expenses?
By how much?

Considering the big dollars in my case; not really. I'm $100 over on Food and Clothing ($2,300 vs $2,400) but most of that is because the disabled baby requires high fat and special foods. My charitable contributions are very reasonable (2% of gross).

The only reason the UST would object at this point is he believes that you have excess income to pay into a Chapter 13 plan. He thinks your expenses are too high and he doesn't believe you can justify them to a judge.

Agreed. He's probably trying to push me out of Ch 7. Do you think he would try to get it dismissed outright? Or is he trying to recalculate the whole thing after stripping out some "extra" expenses?

The reason your attorney is going to want a lot more money is because he should research cases in your circuit for over mean, high income fliers to see what expenses the court will allow. Then use all that he researches in your hearing.

Yes, make sense--I can no longer afford my attorney. He suggested I "run with the ball" as I have no other choice unless someone on here can refer me to someone who will do this pro bono.

Did the UST file this motion after you supplied him with all the paperwork he requested?? or afterward?? If it was afterward, then that's not a good sign because he doesn't believe your expenses will stand up with the judge.

He basically filed it the same time the requested documents landed on his desk. In other words, he didn't even wait to get the stuff because he was planning to file 707(b) all along. It is plainly obvious now. HOWEVER, I realize now that he has not filed a motion. Or has he? All that shows up on PACER IS: "The United States Trustee has reviewed all materials filed by the debtor and has determined that the debtor's case is presumed to be an abuse under Section 707(b). Filed by U.S. Trustee." I am not a lawyer; don't know but that doesnt seem like a motion. That just sounds like "hey, when I see you in a few weeks I'm going to say you can be Ch 13 because..." Yes???

Ask the UST just how much he expects you to be able to pay in a Chapter 13?? If it's $200/month might be worth it to get rid of the 2nd mortgage.

a) When do I ask him? In a letter before my follow-up to the 341?

b) How can I get rid of the 2nd mortgage? True, it is subordinated to my first one. My second one is $840 per month. If I can get rid of it legally, I would. How? Is there a posting on this?

What the UST is saying that even through you've showed on paper that you pass the means test they still believe that you have the ability to pay back some of your debts because your expenses are too high. You will be given the option of converting to a 13.

Can you explain the "option to convert"? Will he propose a monthly figure? Is it negotiable? Does he do this at my follow-up meeting or does it arrive in the mail out of the blue?

Please - further comments?

[NowImDownInIt]

If your house is worth less than the amount of your first mortgage than the second can be stripped. That could potentially free up $840 for a Chapter 13 payment.

[NowImDownInIt]

That's fair market value, btw, so you'll need comparisons and an appraisal.