Ch.7 dismissed due to "abuse" AND "totality of circumstances"

[banca rotta]

What does your lawyer think?

40k in vehicles and music lessons for your children sound discretionary. Can you convert to a 13 instead, or is it too late?

The OP can convert. That's what the UST wants. Either a 13 or dismissal. A 7 maybe difficult with these expenses and income. The judge may decide which it is if it goes to court.

[justbroke]

In some areas, it is average to have a $3K or $4K house payment, where in others $600 is the norm. As with salaries, if you are making $100K a year but your in a house that costs $3 or $4K a month, you will wind up just as much in the hole as the family that is making $50K in that $600 a month house. I hope my example makes sense, but its all relative.

Makes perfect sense! I agree with it as well.

[goingcrzy]

As was mentioned earlier if the two, 40k cars were actually secured loans rather then leases you would have more of an argument against the UST since congress allowed this.

I'm not implying the OP is a fraud or an abuser especially when some cities are very expensive and some careers actually require expensive cars, but if this was me I would have basically dumped the cars and bought two cheaper 12k cars, stopped all payments on all debts except for the house and with such a high income save up the money to negotiate with your creditors like 10to 20 cents on the dollar.

The UST probably feels the same way and wants you in a chapter 13 to do just that.


Good luck

but wouldn't the OP get 1099ed and get a huge tax bill if she did this outside of a chap 13? Also, doesn't this assume the OP can get another loan (with little or no cash down) while defaulting on the leases before entering a 13? (or does the UST take the position that they should have planned their bk better and should have dumped the cars before filing the 7) Seems like a catch 22

Plus, isn't taking a new loan out while you know you are insolvent considered fraud?

[backtoschool]

The trustee definitely wants to convert the OP's case to a 13. The income is just too much above the median, and any expenses but food, utilities, and shelter are going to come into question to fund a chap 13 plan.

Settling debts often gives you a huge tax bill, because the forgiven amount becomes "income" on a 1099 form. I know this because I was going to settle my debts as an alternative to chap 13 when I was making a high income.

[2manybills]

Before we filed and before our fico went from 720 to 545 (only a number), we bought a new car, cheaper on gas and about $50.00 less a month than our leased vehicle that only had 2 years left on it. We knew that we wouldn't get the rate we got now in a couple of years (or maybe we would) but it is also accepted more by UST to purchase rather than lease.

[bkmaggster]

Plus, isn't taking a new loan out while you know you are insolvent considered fraud?

Not a secured loan.

[banca rotta]

but wouldn't the OP get 1099ed and get a huge tax bill if she did this outside of a chap 13? Also, doesn't this assume the OP can get another loan (with little or no cash down) while defaulting on the leases before entering a 13? (or does the UST take the position that they should have planned their bk better and should have dumped the cars before filing the 7) Seems like a catch 22

Plus, isn't taking a new loan out while you know you are insolvent considered fraud?

No I never mentioned any new loans. Yes the OP would get a tax bill. It's also much better then 5 years of debtors prison I keep reading about on the 13 forum.

My opinion is kinda out of the Dave Ramsey playbook except Dave tells everyone to pay down their debt.

If I had that kind of income as long as it wouldn't cost me any business I would live very frugal, save up the cash for used cars, feed the family, keep the lights on and the roof over my head then within a year from now as all the charge offs occur hire a good attorney or even do it myself to negotiate with the creditors and then save up for the taxes which will be do the next tax year and pay them.

Unfortunatly the OP will have to really work at this and it will take time but 2 years is better then 5 and 5 is still better then a lifetime of debt.

It's going tp be difficult for that high of an income to have a nice easy "wipe the slate clean" ch7.

[banca rotta]

The trustee definitely wants to convert the OP's case to a 13. The income is just too much above the median, and any expenses but food, utilities, and shelter are going to come into question to fund a chap 13 plan.

Settling debts often gives you a huge tax bill, because the forgiven amount becomes "income" on a 1099 form. I know this because I was going to settle my debts as an alternative to chap 13 when I was making a high income.

There are ways around this but the OP may not qualify.

[bankruptsee]

I'm jealous of that kind of income!

If my wife and I made that, we'd be millionaires by now!

I understand the whole income:debt argument and standards of living. But isn't this why the bk code was re-written?

Its abuse in my book too. Good luck.

[mike258]

When did the UST file his motion? Was it on day 59?

I'm just curious because I am under the scrutiny of the UST and I am on currently day 41.

[goingcrzy]

When did the UST file his motion? Was it on day 59?

I'm just curious because I am under the scrutiny of the UST and I am on currently day 41.

Ours was at day 58, but she had been pestering us the entire time. If you haven't heard a peep so far, you may be in good shape.

Good luck!

[justbroke]

When did the UST file his motion? Was it on day 59?

I'm just curious because I am under the scrutiny of the UST and I am on currently day 41.

The UST can file a motion for "bad faith" and/or "totality of circumstances" anytime before discharge. The UST can also, for cause, extend the discharge as well. This doesn't just sneak up on you. The UST would have let you known at the 341 Meeting or shortly after, that s/he didn't like something about your petition, exemptions, or expenses. This doesn't just pop up out of nowhere.

[2manybills]

[mike258]

The UST can file a motion for "bad faith" and/or "totality of circumstances" anytime before discharge. The UST can also, for cause, extend the discharge as well. This doesn't just sneak up on you. The UST would have let you known at the 341 Meeting or shortly after, that s/he didn't like something about your petition, exemptions, or expenses. This doesn't just pop up out of nowhere.

The UST sent me a letter a few days after I filed asking for all sorts of stuff (2,000+ pages worth). I dropped everything off at his office a week before my 341 and haven't heard anything since. He didn't even show up at my 341.

That's why I was curious about the when OP got his motion to dismiss. Also to the OP: Did you hear anything from the UST prior to this or did this just come out of nowhere?

[justbroke]

I know many people think that this is just for presumed abuse, but I've seen many cases that all state that it is for totality of circumstances.

That particular part of the code (11 USC 707(b)(1)(b)) is for the presumed abuse. Most don't read further to 707(b)(3) where the "bad faith" and "totality of circumstances" exist. They do not have the 10-day bar. They only need be asserted prior to discharge.