Meeting with Atty today re: Chapter 11

[TeacherMomma]

Have a consult with a Chapter 11 Atty today. Sigh. I have to tell the Trustee within 10 days of last Wed if I am converting or dismissing. I am thinking we are converting, unless this atty has other thoughts.

I have a question - wonder if anyone here knows - we are going to be leaving our house soon. Right now the mortgage is 3K, our new rent will be 2K. Is it the same in an 11 as far as deductions you can take (when you are filling out the means test for a 7 and your schedules), that if you are a renter you can only deduct so much for rent, but for a mortgage you can take the full amount? Or because there is no means test anymore, can I take the take the full 2K for my rental?
What I am asking is basically, are they gonna only let me take the CA Standard Rental Deduction, or can do I use my full 2K rent when determining what my Ch 11 payment will be after expenses.

I guess I will find out later today at my consult. LOL

This sucks.

[Kingxray]

Good luck. I know that consulting with an attorney will make you feel better. I am so glad that we have one, as we are also a 707 case.

I"m not sure I can help with your question, though. I know that our attorney said that more is allowed in a 13 than a 7, more like your "real expenses" not those IRS standards on the means test. I'm not sure about an 11. Hopefully it is the same.

I can't say I know what an 11 is. I thought it was for businesses. Would love to see a sticky or a new thread started on Chapter 11.

Good luck at your lawyer today. Let us know.

[TeacherMomma]

Well I can't catch a break here.

The atty just called and cancelled for today. Talked to her for a while, she thinks that I should dismiss and let them all sue me, and see who gets what. She said the minimum fee up front for her services (and she was given to me as the CHEAPEST they knew of) was going to be 15K up front and 15K along the way - at MINIMUM.

So - that ain't gonna happen even if she DID think I should convert. She said that I should dismiss, and then deal with the creditors as they come.

Amazing.

Back to square one.

[Kingxray]

Hey teachermomma, something just came to mind. When converting do you have to redo your numbers, or do they just use the numbers from the schedule I and J that you used to file your chapter 7? Isn't your case is still open and they look back 6 months prior to filing, not todays numbers, right? Maybe someone out there can answer this. Anyway, just a thought.

[jadams]

What is the billing structure like with the CH 11 attorneys you've spoken with?

I'm just wondering if they have flat fees for certain parts of the process, or if they're billing you by the hour and they're just trying to estimate the billable hours.

If the latter, my district had a recent rule allowing attorneys to provide unbundled services and limited representation. I don't know if your district had a similar rule or if it even applies in a CH 11.

Maybe that would be a route to just paying for essentially document prep from the attorney so you aren't paying their hourly rate to attend all the hearings, creditor meetings, etc. (which I understand are much more frequent and lengthly in an 11)?

I suppose you'd have to find a lawyer interested in such an arrangement first, and that's probably not very likely considering you're kind of stuck right now.

[HHM]

No such thing as flat fees in chapter 11.

Chapter 11, for the individual is a last resort, most can't afford it. The only reason you file a chatper 11 is if you don't qualify for a chapter 13 and a chapter 7 doesn't make sense for some reason. Usually, if a person goes down the chapter 11 route, they are trying to hold onto some assets that they really have no business trying to keep, they will spend 10's of thousands of dollars in a chapter 11 to only have it convereted to a 7 within a year or so.

[TeacherMomma]

Chapter 11 is up front like I said with the 15K, then the rest is an estimate on the hourly....

Yeah,,,,,,the atty said that we are better off signing up for a debt consolidation program to work out everything with the credit cards (did that -can't make that lump sum payment PLUS my student loan payment) and letting the SLs sue me for a garnishment since that would be "only" 25% of my income and the SL payment,and my SL payment now is like $3000.

Since the SLs are mostly with one company but there are a few stragglers. So let's say that my big company raced to the court to sue me, and got a 25% judgement, does that mean that they are the only ones who will be able to garnish me? Or can everyone come and get their judgement?? (I am thinking not, since at that point I am not earning any money after the judgements!)

[HHM]

Chapter 11 is up front like I said with the 15K, then the rest is an estimate on the hourly....

Yeah,,,,,,the atty said that we are better off signing up for a debt consolidation program to work out everything with the credit cards (did that -can't make that lump sum payment PLUS my student loan payment) and letting the SLs sue me for a garnishment since that would be "only" 25% of my income and the SL payment,and my SL payment now is like $3000.

Since the SLs are mostly with one company but there are a few stragglers. So let's say that my big company raced to the court to sue me, and got a 25% judgement, does that mean that they are the only ones who will be able to garnish me? Or can everyone come and get their judgement?? (I am thinking not, since at that point I am not earning any money after the judgements!)

That will depend on your state law, but generally, garnsihment is first come, first served. The first garnishing creditor gets the full amount (25%), the rest wait in line until that garnishment order is released. The other issue here, SL lenders can typically go directly after tax refunds, just FYI.

[TeacherMomma]

I don't ever get a refund - we owe - so fine by me!! LOL

[backtoschool]

TeacherMomma, I am so sorry to hear about the outcome of all the work you put into this bankruptcy.

Those chapter 11 fees are outrageous. Clearly Chapter 11 is not meant for individuals or families.

I know what a burden my 100k of student loans has been so I can imagine how your student loan burden feels. When I was in nyc and my income contingent loan payment was $1500 a month, which I couldn't afford, I really thought about defaulting again. The problem with you defaulting again and letting them sue you is that they will add on a 25 to 30% admin fee on the loans and in your case that will be an unbelievable extra sum of money.

Whatever payment plan or garnishment you go into with them, just never let them get 270 days past due or you will be adding another 25% onto the loans.

[2manybills]

TeacherMomma: The other CC won't be able to garnish without a judgment, so they will have to sue you.

Have you talked to anyone about letting them dismiss and then refiling in 6 months? How far over the Chapter 13 limit are you?

As for the collections stuff, you know where to PM me at for forms, etc.

[TeacherMomma]

2manybills - What do you mean the forms for collections?

OH! And I didn't tell you all the kicker: so the USTs "plan" was to have us in an 11 long enough to pay down the debt to under the 13 limit (we are about 100K over), then covert to a 13. AND THEN HE SAYS TO US and the other attys we were all talking with, that at the end of the 13 that we WOULD THEN HAVE A GOOD SHOT AT A HARDSHIP DISCHARGE BECAUSE OF THE AMOUNT LEFT FOR US TO PAY AND THE HARDSHIP IT WOULD CAUSE US.

I don't even need to explain the law and how and why that isn't how things work.

But that is who we are dealing with here. He says THAT yet fights us on the current state of our affairs! Amazing.

[2manybills]

TeacherMomma: I was talking about IF creditor start to file lawsuits, then I can help to defend and put off as much as we can. Civil litigation is what I do, so whatever it takes.

I just feel so bad for you guys that you aren't catching a break here. It just doesn't seem right that there is not a way around this. Would it make a difference, if you dismissed and filed again in 6 months with an attorney that is an expert in pushing Chapter 7's with student loans through? I don't know but wish I had more answers for sure! I've definitely put out a few feelers to my friends that do BK and will PM with results.

[backtoschool]

I am just really worried that if you go for a wage garnishment, then another 25% admin fee is going to be added to the loans. I had the 25% admin fee added on twice to my loans and that pretty much doubled them in size to the 100k they are now.

[2manybills]

I am just really worried that if you go for a wage garnishment, then another 25% admin fee is going to be added to the loans. I had the 25% admin fee added on twice to my loans and that pretty much doubled them in size to the 100k they are now.

bts: You worry like I do. I really feel bad for these guys!