Pro Se Dismissal Chapter 7

[BKINTEXAS]

Good day all!

After learning that a future inheritance will be seized by the trustee, I want to dismiss my Chapter 7 (filed on 1/14/09, 341 on 2/9/09) and work with my creditors.

Can I do this and what are the ways.

Thank you for your input!

[justbroke]

Good day all!

After learning that a future inheritance will be seized by the trustee, I want to dismiss my Chapter 7 (filed on 1/14/09, 341 on 2/9/09) and work with my creditors.

Can I do this and what are the ways.

Thank you for your input!

No, you can't dismiss a Chapter 7.

Unfortunately Chapter 7s become a life of their own once they are initiated. Having wrote that, you may be able to get it dismissed, but you actually have to motion for it, and it may not be granted.

A Chapter 7 can only be dismissed for cause, and the Judge has discretion. He will be looking at, are you trying to hide money.

This is a problem which plagues pro se filers all the time, so you are not the first. However, Chapter 7s are rarely dismissed by Motion.

[BKINTEXAS]

In my filing I stated that there is an inheritance - not trying to hide it.

As of this day I do not know the actual amount or when I will receive it, but I'm certain I will receive within the 180 day period - perhaps in April, 09.

The nuts and bolts - I would rather deal with my creditors than have the inheritance seized. If I had the inheritance prior to filing I wouldn't have filed.

[BKINTEXAS]

What if happen to miss the 341?

What happens then?

[justbroke]

What if happen to miss the 341?

What happens then?

If you miss your 341 and the Trustee knows of your inheritance... they may motion to dismiss the case with prejudice. Otherwise, they'd normally just motion to dismiss for failure to appear.

This is dicey.

[BKINTEXAS]

What if at the 341 I discuss the dismissal?

[justbroke]

What if at the 341 I discuss the dismissal?

I don't think you can discuss it. It's by motion to the Court, not to the Trustee.

[JRScott]

Most likely if you failed to appear the Trustee can take a few actions:

1. He could dismiss with prejudice if he thinks you are trying to protect your inheritance. (probably the least likely but it is possible).

2. He could dismiss without prejudice if he does so because you didn't appear. (this is the probable outcome).

3. He could decide to give you a break and continue the meeting to another date. (This is a rare occurrence as is 1 in most jurisdictions)

Depending on the value of the inheritance it may or may not be worth their effort.

You could file a motion to dismiss but keep in mind it may or may not be granted as others aid.

If you do nothing and proceed:

What would happen is your case would proceed normally to discharge, then the case would not be closed until the inheritance was settled. The Trustee would then decide if it is worth their effort to seize or not (generally they look I think for around a thousand dollars or so). If its big enough he'll take it let the creditors know funds are available, they'll each file a claim, he'll distribute the funds, he'll pay himself to administer the estate, any leftover if there is any would be returned to you.

[TEW]

Good day all!

After learning that a future inheritance will be seized by the trustee, I want to dismiss my Chapter 7 (filed on 1/14/09, 341 on 2/9/09) and work with my creditors.Work with them how? Pay them a little bit pay them in full?

Can I do this and what are the ways.

Thank you for your input!

[2Bshinyandnew]

If the CH7 is dismissed why wouldn't the creditors have the same incentive to work with you as anyone else?

The resulting tax liability on the forgiven debt would be 15% (maybe 20%, depending on the tax payers tax bracket) of the forgiven debt. So if the original debt is $100K and your creditors settle for $50K, you receive a 1099 for the forgiven $50K which results in a tax liability to the IRS of $7500-$10000, so the debtor is paying out $57500-$60000 including tax liability to settle $100K debt. Not bad if you have the cash, which someone who just received an inheritance will have.

It is a numbers game. If the inheritance is large enough to pay off all the original debts amounts, and you go through a ch7, the trustee isn't going to negotiate a lower settlement, is he? What would be the trustee's incentive to do that? None, since the trustee gets paid a % of the "take", the higher the better. Any agreement made with the creditors outside the BK process should be "better" than what the trustee will do, so long as you can legitimately dismiss the petition.

I don't know how much money the OP is inheriting or what the actual #'s are, but if the scenario is like I stated above, i would keep looking for ways to dismiss the CH7 and offer the creditors a settlement once the inheritance is actually in his bank account.

[BKINTEXAS]

I'm with you - it's a numbers game and why wouldn't the creditors want to settle with me?

My understanding about the 1099's is that I would be liable to the IRS for the difference of my insolvency (which is proved by my schedules for Chap 7 BK). For instance - my assets are worth 35K and my debts total 45K - I am insolvent to the tune of 10K. The creditor forgives $8500 of the debt - I do not have to report that is income.

However, if my assets are worth 35K and my debts total 45K, but the creditors write off $14K in debts, I don't have to report the 10K of income, but will need to report the 4K on my tax return.

I have an appt. with an attorney on Monday prior to my 341 - I feel the money invested in this appt. is well worth it and will give me some substantial answers as to what to do.

[banca rotta]

OOPS! At least you know what to do the next time...

[catleg]

I am wondering if perhaps your creditors don't file a proof of claim then they wouldn't be entitled to a share of the inheritance, if taken by the trustee.
I'm not sure how often that happens or to what extent.

[justbroke]

I am wondering if perhaps your creditors don't file a proof of claim then they wouldn't be entitled to a share of the inheritance, if taken by the trustee.
I'm not sure how often that happens or to what extent.

You are correct. Unsecured creditors who did not file a proof of claim which was allowed (an allowed unsecured claim), would not be entitled to any of the inheritance.

Any smart unsecured creditor, seeing an "asset" Chapter 7 case filed, would, could and should be all over the case and filing immediately! It's like blood in the water for sharks.

[HHM]

If there is an inheritance on the horizon, there is NO WAY your trustee will agree to dismiss. This talk of creditors is useless, it is the trustee that will make the decision.

Bottom line, there is no way to voluntarily dismiss the chapter 7, and even though you can try things like "not attend the 341", if you have already disclosed the inheritance, you have already shot yourself in the foot.

Good luck.