Ch. 7 to a Ch. 13 - Back to a Ch. 7?

[KLH547]

So . . . I met with my attorney on Friday and my chapter 7 has now been converted to a chapter 13. Boo! Long story short - I was over the median income by $671.00 but my schedule j is $-251.00. My atty. suggested converting prior to the UST filing for presumption of abuse.

Turns out, the UST is only allowing the standard IRS expenses, not my actual expenses. Not quite sure how that can even be since my rent alone is $250.00 over the standard expense and my out of pocket medical expenses exceed the allowed $60.00 per month. I have the receipts/bank statements to attest to all this. The UST is saying that I have $865.00 per month to pay back my creditors which is a total freakin' farce because if I had that much left over every month, I would not have filed for bk!!

So we went through my expenses again and my atty. is going to file a plan next week stating I can pay $105.00 per month. Even that will be a struggle.
I took another pay cut the first of July - I filed June 15. My 341 is Aug. 10th and the plan confirmation hearing is Sept. 24th. My gut is telling me that the payment will not be approved based on the vast difference in what I can theoretically pay and what the UST says I can pay. I have a feeling this will probably drag on for several months. If it can't be worked out, I'm thinking the UST will eventually file to dismiss? If that happens and I now fall under the median,due to the additional paycut, could it be converted back to a ch 7? Just a note, the paycut was not expected or I would have postponed the filing for a month or two to avoid this flippin' mess!

Any thoughts would be appreciated!

[lrprn]

You said you took a pay cut on July 1. Was the drop enough to get your disposable income on the Means Test under $100/month (the minimum that can support a Ch 13 plan)?

If yes, then you can file the 13 now, then after six (or less) months when the six-month lookback decreases enough to show you don't have sufficient income to support the 13 any longer, your lawyer can convert the case to a 7 at that time. Discuss this possiblity with your lawyer.

In the meantime, please DO NOT sign a Ch 13 plan that you KNOW cannot succeed. Find more legitimate expenses to whittle down your disposable income. Make your lawyer fight for you by helping you sort out what your realistic options are. You could take the chance, file the 7 based on the negative disposable income showing on your Schedules, and see what the US Trustee does.

Again, you need to work all of this through with your lawyer and understand exactly why she thinks a 13 at this point is best. Is it that she doesn't want to fight the trustee, or that she is very familiar with what your local trustee is going to accept and what he/she won't?

[KLH547]

The pay cut was indeed enough to put me below the median - the only plus to that sucky turn of events. . .

My atty told me that he was very familiar with this particular trustee and he doesn't think that the trustee will bite for this plan since the discrepancy between what I can theoretically pay and what he wants me to pay is so large. My atty felt that the switch to the 13 was a good choice for the time being since at the time of filing I was over the median and apparently this UST raises the abuse flag at the drop of a hat . . . Switching the 7 to a 13 for the time being would keep me under the protection of bankruptcy while the plan was being worked out. It's just a waiting game at the moment.

I have no intention of signing a plan I know will not succeed. I have made that abundently clear to my attorney. We'll see what happens after the plan is filed!

I'll keep everyone posted . . .

[pcn]

Doesn't the judge determine if a plan is approved, not the trustee? And won't the atty get paid twice if he gets you to do a ch13 and then a ch7? Can you find another atty before you lose too much $ with this one, who sounds like he really isn't looking out for your best interests?

[HHM]

You can convert back to a 7, the right you lose if your case is converted from 7 to 13, is the right to voluntarly dismiss your chapter 13.

[KLH547]

Thanks, HHM. I appreciate the information. Only time will tell!