Home Sold After Filing

[PCHwy_Rock]

We listed our home for sale prior to filing a Chapter 7. By the time of our BK hearing, a sale was pending and in fact closed about a week following the hearing. During the hearing, the UST was informed of the pending market price sale, and he allowed the sale of the home. Upon closing, the 1st mortgage of $286,000 was then paid in full, and we received no homestead exemption or proceeds of any kind from this sale. If the $286,000 from the mortgage is deducted from our total debt, then our non-consumer debt accounts for 74% of all remaining debt, qualifying us for a Ch 7 discharge. However, if the $286,000 from the Mortgage is included as consumer debt, then our debt becomes primarily consumer debt and we face Ch 7 dismissal and a Ch 13 payment plan over the next 5 years. Because our case was originally filed with the debt from the 1st Mortgage listed among our secured consumer debts, does the amount of the 1st mortgage still get added to our total consumer debt, even though the home sold and the debt from 1st mortgage no longer exists?

[TEW]

This si a new one on me. I thought NON consumer debt was business debt there are people on the board that don't own a house and up to their ears in debt. and they are in chapter 7. you may have messed yourself up if you used the payment on the house to Qualify for chapter 7 and now you no longer have it. Did you end up with a lot of disposable income?

[JRScott]

Not enough information here. I'd have to know a lot more about your situation. Non consumer debt is business debt. If you have significant business debt then yes it could affect status. This is probably something to ask your lawyer if you filed with one.

Keep in mind if the home sold the trustee could challenge any expense for it, though you could replace that with what you are paying in rent now or new mortgage if you have one.

[PCHwy_Rock]

[Help!]

My interpretation would be that based on the wording in Title 11, the "debt you are seeking to discharge" is primarily non-consumer debt. You are no longer seeking to discharge that $286,000, so you are immune to the 707(b) dismissal for presumption of abuse. Your petition should be amended to exclude this debt.

[PCHwy_Rock]

Thanks, Help! - That's exactly what I asked my attorney to do, but for some reason (undisclosed to me) my attorney says I'm stuck with the numbers we originally filed. Does anyone know why we couldn't file an amendment, or better yet, does anyone know for certain that we CAN file an amended petition?

Here's another thought. My attorney was aware of the offer on our home BEFORE we filed. If he had advised me to wait until after the home sale closed, we could have filed the Ch 7 petition without having the mortgage included in my consumer debt. This would have completely eliminated this issue altogether and I would have breezed through a Ch7 discharge. Does this sound like a bit of an oversight to anyone else?

[BK2008]

Thanks, Help! - That's exactly what I asked my attorney to do, but for some reason (undisclosed to me) my attorney says I'm stuck with the numbers we originally filed. Does anyone know why we couldn't file an amendment, or better yet, does anyone know for certain that we CAN file an amended petition?

Here's another thought. My attorney was aware of the offer on our home BEFORE we filed. If he had advised me to wait until after the home sale closed, we could have filed the Ch 7 petition without having the mortgage included in my consumer debt. This would have completely eliminated this issue altogether and I would have breezed through a Ch7 discharge. Does this sound like a bit of an oversight to anyone else?

You CAN file an amendment. In fact, I noticed errors and irregularities in the numbers on my schedule at my 341, let the trustee know what needed to be corrected, and he told my attorney to go back and amend the schedules.

And so it was.

[PCHwy_Rock]

Thanks, BK2008. That's encouraging. I've sent a note to my attorney requesting (again) that we file an amendment to fix this. I'll post the results as this unfolds.

[Help!]

If there is a motion to dismiss hearing, I wouldn't wait for an email reply or for my call to be returned. I would be sitting in his waiting room waiting for him first thing in the morning!

[Help!]

And another thing... I'd have him call up the UST's attorney ASAP while I'm in the room to explain the circumstances. The UST has the ability to strike the hearing and file a declination.

[soleprop]

I thought NON consumer debt was business debt

FWIW, nonconsumer debt is any debt incurred by means other than by consuming/purchasing. business debts, investment real estate debts, income tax debts, alimony or mandatory financial support obligations could be considered nonconsumer debts. i'm unclear if student loans and medical debt could also be considered nonconsumer debt. really i'm unclear on most of it - but i've seen lots of reference to the above as nonconsumer debts and as such thought i'd point out that it doesn't necessarily have to be business debt to be considered nonconsumer; there are a few other debts that also fall into the category.

not all nonconsumer debts are dischargeable, but they do all count towards the 51% or more of total debts owed that are required to prove the 'primarily nonconsumer debt' statement true and avoid the presumption of abuse under the 707 code.