If Chapter 7 case is dismissed what can happen

[texanboy76]

If your chapter 7 case gets dismissed and you can't get into a 13 what happens? I realize the creditors sell of your debt to collection agencies and they can file a judgment against you. In the state of Texas they can't garnish or take your house/cars. Is there anything they can really do?

[justbroke]

If your chapter 7 case gets dismissed and you can't get into a 13 what happens? I realize the creditors sell of your debt to collection agencies and they can file a judgment against you. In the state of Texas they can't garnish or take your house/cars. Is there anything they can really do?

Yes, they can sue you, get a judgment, and then make your life miserable for the next 10-20 years. What if you have unearned income in a bank account? They can get to that.

Playing the "judgment proof" game is not really a winning strategy, if you ask me. It eventually needs to be dealt with.

Why would you not be able to "get into a 13"?

[texanboy76]

Yes, they can sue you, get a judgment, and then make your life miserable for the next 10-20 years. What if you have unearned income in a bank account? They can get to that.

Playing the "judgment proof" game is not really a winning strategy, if you ask me. It eventually needs to be dealt with.

Why would you not be able to "get into a 13"?

The 13 is not an option as there is no disposable income at end of month. We are planning to fight the Chapter 7 motion to dismiss....I just was curious what they can sue you for or get a judgment if there is nothing to get....

[justbroke]

The 13 is not an option as there is no disposable income at end of month. We are planning to fight the Chapter 7 motion to dismiss....I just was curious what they can sue you for or get a judgment if there is nothing to get....

I'm unsure what you mean by you can't file a Chapter 13. Your disposable income is calculated using a formula (the means test), or by a simple income less expense calculation (Schedule I/J).

If your Chapter 7 is being dismissed because the Trustee has found that you do have money to fund a Chapter 13, then you do have money to fund a Chapter 13.

If you're saying that based on your expenses, and not the allowed expenses, you don't have money left over, then you "choose" not to be in a Chapter 13. I'm trying to differentiate the two.

I just don't understand. So, did the Trustee file a 707(b) Motion to Dismiss already, and for what reason?

[texanboy76]

I'm unsure what you mean by you can't file a Chapter 13. Your disposable income is calculated using a formula (the means test), or by a simple income less expense calculation (Schedule I/J).

If your Chapter 7 is being dismissed because the Trustee has found that you do have money to fund a Chapter 13, then you do have money to fund a Chapter 13.

If you're saying that based on your expenses, and not the allowed expenses, you don't have money left over, then you "choose" not to be in a Chapter 13. I'm trying to differentiate the two.

I just don't understand. So, did the Trustee file a 707(b) Motion to Dismiss already, and for what reason?

[DeadManCrawling]

You could let it be dismissed, add an expense like life insurance, and refile when the law allows. Expect MUCH greater scrutiny if you do so.

The court has decided that you have enough money to fund a ch 13. Without more detail from you, no one can say why.

You claim to have no DMI, but the court obviously disagrees. Since they ARE the law, they will win.

CH 13 is a good option, but you may be able to reset some of the expenses based on actual expenses. It sounds like (I am guessing) the court disallowed some expenses you claimed. If you can substantiate them as true, you may be able to do a CH 13 with no payment to unsecured.

[texanboy76]

do they scrutinize you since you are dismissed from a 7? Also what happens if you don't escrow taxes for your home however I usually expect a large return that will yield me money at end of February to pay taxes..Will the trustee take that check? I haven't talked to my attorney yet as he is out of town but I'm assuming this process can be rather quick? What happens if you make those payments in your plan and they don't approve what you submit. Do you get that money back?

[justbroke]

That means that you do in fact have disposable income. It might only be $200/month, but based on the hypothetical Chapter 13 that they presented, you have disposable income over $109.58 (or $182.50 if you can rebut the presumption of abuse) in order to fund a Chapter 13.

I think you're missing the finer point of not only what I wrote before and what the Court just ruled on but also what I'm writing now. There is something in your expenses that they (the Trustee, Court, Code) are not going to allow as an expense. This is freeing up money to be able to afford a Chapter 13.

In the UST's motion to dismiss for "totality of circumstances" under 11 USC 707(b)(3), the UST's complaint should have listed how much money you would have as disposable income in a hypothetical Chapter 13. What was that number? The Court order probably has a similar mention of what disposable income you have... what is that number?

[texanboy76]

That means that you do in fact have disposable income. It might only be $200/month, but based on the hypothetical Chapter 13 that they presented, you have disposable income over $109.58 (or $182.50 if you can rebut the presumption of abuse) in order to fund a Chapter 13.

I think you're missing the finer point of not only what I wrote before and what the Court just ruled on but also what I'm writing now. There is something in your expenses that they (the Trustee, Court, Code) are not going to allow as an expense. This is freeing up money to be able to afford a Chapter 13.

In the UST's motion to dismiss for "totality of circumstances" under 11 USC 707(b)(3), the UST's complaint should have listed how much money you would have as disposable income in a hypothetical Chapter 13. What was that number? The Court order probably has a similar mention of what disposable income you have... what is that number?

[DeadManCrawling]

That did help.

Where you hurt your cause was admitting that a rebound in the economy would probably improve your finances. The trustee took this as a certainty and pushed the matter to the limit. Resulting in your dismissal or conversion.

Had you simply said, and believed, that there was no hope for improvement in the future, you MAY have been okay. Additionally, there were apparently expenses that were questioned.

The judge in this case decided to shift the case to CH 13 if possible. I would be very clear about expenses in CH 13 court, and be ready to justify every last dollar, since you were dismissed in the 7. They will be watching closely and you will want to be able to prove every last dollar.

If all goes well, you will get your 13.

If all goes well for the trustee in the 13, you will see an income increase and will have to apply that to payments to unsecureds when your income increases or you receive bonuses or large tax refunds.

Get that tax refund to shrink to the smallest possible amount, immediately. That was the other concern the trustee voiced, if I recall the post right.

Good luck,

-dmc

[justbroke]

Just reads like the UST wanted you to be dismissed as an abuse. I don't know why they attempted to deny you under Chapter 13 too, as a "different" type of abuse. I mean the "bad faith" type of abuse which would indicate a real attempt by the debtor to abuse the system and file the petition in bad faith (due to items on the schedules or pre or post-petition conduct).

While a hypothetical Chapter 13 may provide no dividend, the fact of the matter must be that there is something in your totality of circumstances that says that you could actually fund one. Whether you actually provide a dividend to unsecured creditors is a requirement of find the Chapter 7 case an abuse... is immaterial in some Districts. That is, that so long as the Chapter 7 case shows that you have at least 109.58 (or $182.50 if you can rebut the presumption of abuse) in disposable income... you could fund a Chapter 13. Generally what happens though, in those cases, is that you end up spending the money on the Trustee fees or attorney fees anyhow... but that doesn't seem to move many Judges to not find your case an abuse under Chapter 7.

A Chapter 13 doesn't mean you're paying unsecured creditors anything (by a simple look at the DMI on the Means Test). However, it's possible you could. This could happen by increases in salary, bonuses, or even tax refunds in the years you're required to be in Plan. As such... this is why they don't care that you're paying 0% to unsecured creditors. I'm in a 0% plan myself. However, any tax refund, would go to unsecured creditors, so there is the potential that they'd receive some dividend.

[texanboy76]

That did help.

Where you hurt your cause was admitting that a rebound in the economy would probably improve your finances. The trustee took this as a certainty and pushed the matter to the limit. Resulting in your dismissal or conversion.

Had you simply said, and believed, that there was no hope for improvement in the future, you MAY have been okay. Additionally, there were apparently expenses that were questioned.

The judge in this case decided to shift the case to CH 13 if possible. I would be very clear about expenses in CH 13 court, and be ready to justify every last dollar, since you were dismissed in the 7. They will be watching closely and you will want to be able to prove every last dollar.

If all goes well, you will get your 13.

If all goes well for the trustee in the 13, you will see an income increase and will have to apply that to payments to unsecureds when your income increases or you receive bonuses or large tax refunds.

Get that tax refund to shrink to the smallest possible amount, immediately. That was the other concern the trustee voiced, if I recall the post right.

Good luck,

-dmc

amazing how they reported on the findings. First my pay decreased and they aren't going to re-instate the reduction in pay.I also said that Bonus payments were suspended until June 2010. Bonus can be a moving target and is hard to guage on what you will get. So in a 13 a trustee can monitor all your expenses and adjust accordingly?

[justbroke]

So in a 13 a trustee can monitor all your expenses and adjust accordingly?

The Chapter 13 Trustee usually does this by requiring copies of tax returns for each year that you're in Plan.

[texanboy76]

Just reads like the UST wanted you to be dismissed as an abuse. I don't know why they attempted to deny you under Chapter 13 too, as a "different" type of abuse. I mean the "bad faith" type of abuse which would indicate a real attempt by the debtor to abuse the system and file the petition in bad faith (due to items on the schedules or pre or post-petition conduct).

While a hypothetical Chapter 13 may provide no dividend, the fact of the matter must be that there is something in your totality of circumstances that says that you could actually fund one. Whether you actually provide a dividend to unsecured creditors is a requirement of find the Chapter 7 case an abuse... is immaterial in some Districts. That is, that so long as the Chapter 7 case shows that you have at least 109.58 (or $182.50 if you can rebut the presumption of abuse) in disposable income... you could fund a Chapter 13. Generally what happens though, in those cases, is that you end up spending the money on the Trustee fees or attorney fees anyhow... but that doesn't seem to move many Judges to not find your case an abuse under Chapter 7.

A Chapter 13 doesn't mean you're paying unsecured creditors anything (by a simple look at the DMI on the Means Test). However, it's possible you could. This could happen by increases in salary, bonuses, or even tax refunds in the years you're required to be in Plan. As such... this is why they don't care that you're paying 0% to unsecured creditors. I'm in a 0% plan myself. However, any tax refund, would go to unsecured creditors, so there is the potential that they'd receive some dividend.

so let's say that put you in a 13 for $200 a month and then a year later things turn and you can't make that payment etc....will they put you into a chapter 7? Also do I try and get my refund very low? I do alot of driving today on my car and get paid .55 mile however the wear and tear on the car is huge and it allows me to get some cash flow to try and make ends meet. If that ever dried up it would seriously affect my ability to pay something to the my Ch 13 plan. I'm so confused and worried about this whole ordeal. My attorney is on vacation and this all has to be complete in the next 12 days

[texanboy76]

The Chapter 13 Trustee usually does this by requiring copies of tax returns for each year that you're in Plan.

not a problem...pay is not going to go up at all and iif it does t could go up or down a few thousand each year based on the bonus. Let's say I have daycare expenses now and for the next couple of years $1000/month. If that expenses gets removed in 2012 will that go against me? That won't have any effect on my tax return etc....