US Trustee and State Trustee Question

[NSH]

Okay, I just spoke to a lawyer a few minutes ago who scared the crap out of me. I explained that I had a lot of taxes needing to be discharged, which he knew they could be, so that is a plus considering how many lawyers are ignorant of this!

My income was very low the last two years, under 20K, by the way. He told me that because I have hundreds of thousands of dollars in debt that the US Trustee could get involved and raise an objection as well as the state Trustee, and that they may ask fr more documentation and could have my petition for BK dismissed more. He didn't say this was extremely possible, but said that I need far more documentation than, say I would if I had a lot less debt because the US Trustee would be a lot harder to deal with in a case with so much debt.

He also told me that his fees would be somewhere between 5K and 7.5K for the Chapter 7. When I asked him why the fees were so high, and explained that other lawyers were quoting me a lot less (about 1.5K), he said that anyone who would take a complex case like mine for that kind of money has no idea what they are doing! He explained that with all the taxes plus so much money that I would have to pay the kind of money he was charging!

I have one guy who also knows my situation. He, in fact is someone I believe who advertises on this site, William Schneider & Associates. He told me it would be about 1.5K plus the filing fees. His site is here: http://nynjbankruptcy.reachlocal.com..._id=3394409987

Any idea what I should do or how to choose my Attorney?

[TeacherMomma]

I have a side-question - how are you getting taxes discharged?

[NSH]

Because the ones I am petitioning for discharge are from 2005 and earlier and I filed them in 2006 and earlier for the earlier years.

Edit: Okay, actually he is not advertizing on this site. When I clicked on the Chapter 7 link at the top of the forum, it sent me to a Google Ads page and This office was the FIRST one on the list the forum sent me to. Since this site was a portal to the Google Ads page, I assumed it was some sort of an affiliate.

[backtoschool]

Okay, I just spoke to a lawyer a few minutes ago who scared the crap out of me. I explained that I had a lot of taxes needing to be discharged, which he knew they could be, so that is a plus considering how many lawyers are ignorant of this!

My income was very low the last two years, under 20K, by the way. He told me that because I have hundreds of thousands of dollars in debt that the US Trustee could get involved and raise an objection as well as the state Trustee, and that they may ask fr more documentation and could have my petition for BK dismissed more. He didn't say this was extremely possible, but said that I need far more documentation than, say I would if I had a lot less debt because the US Trustee would be a lot harder to deal with in a case with so much debt.

He also told me that his fees would be somewhere between 5K and 7.5K for the Chapter 7. When I asked him why the fees were so high, and explained that other lawyers were quoting me a lot less (about 1.5K), he said that anyone who would take a complex case like mine for that kind of money has no idea what they are doing! He explained that with all the taxes plus so much money that I would have to pay the kind of money he was charging!

I have one guy who also knows my situation. He, in fact is someone I believe who advertises on this site, William Schneider & Associates. He told me it would be about 1.5K plus the filing fees. His site is here: http://nynjbankruptcy.reachlocal.com..._id=3394409987

Any idea what I should do or how to choose my Attorney?

I think the attorney you just talked to gave you very good advice. I made 175k+ a year when I lived in nyc, and I still ended up having to file bankruptcy due to the super high cost of living there. I just couldn't pay my bills, my credit cards and my student loans on that salary. You are going to have a hard time convincing a trustee and a US trustee that you were able to live in nyc on 20k a year without some serious cash being hidden under the mattress. I am just playing devil's advocate here. The US Trustee and the trustee are going to want to get their hands on the "cash under the mattress" that they will think you have, given your low salary numbers. The US trustee is going to be very interested in how you acquired so much debt with such a small income. They will most likely give you a proctology exam to go over all of your debt and expenses.

Your case is a very complicated one. Each and every expense and income item will most likely be examined, and with the taxes being filed right before you file, and you trying to discharge your taxes, expect the irs to take a very close interest in your case as well.

It is doable, but to expect to pay $1,500 and file a couple of forms is not a realistic expectation in my opinion.

I think that not only is the large amount of debt an issue that is a red flag for the US Trustee, but it is the combination of two years of extremely low income (for nyc) and extremely high debt, and no tax returns until the last minute that will be interesting to the US Trustee.

[goingcrzy]

find out if his fee will cover the cost to go to court. We had to go to fight the UST and it costs us $$$

[nc73]

I agree with the above poster.

[NSH]

Thanks, backtoschool.

I live in an apartment owned by my mother, and my rent is a mere $800.00 per month. I stopped paying for cable, a house phone, and other luxuries. All I have is rent, food, electic, gas, and very limited travel expenses when using my mother's vehicle for work. I don't pay car payments or insurance because the car was repo'd last year. Basically my expenses are very low or I would be screwed.

There is no money under the mattress, but what might get me into trouble is that during the time I was charging up major debts, in addition to sinking all that money into a failing business, I was, of course living on it as well. Not sure if this would get me into trouble, but one good piece of news is that 99% of my debt is from two years ago or a little more. In other words, I have not been charging up rent, food, and utility money for over two years.

Oh, and all my student loans are presently in defferment/forebearance, so I am not paying them.


Edit: By the way, backtoschool, I DO NOT live in Manhattan. I live in Brooklyn, which is a lot cheaper. Plus I own no property, condo's or anything else of worth.

[backtoschool]

Thanks, backtoschool.

I live in an apartment owned by my mother, and my rent is a mere $800.00 per month. I stopped paying for cable, a house phone, and other luxuries. All I have is rent, food, electic, gas, and very limited travel expenses when using my mother's vehicle for work. I don't pay car payments or insurance because the car was repo'd last year. Basically my expenses are very low or I would be screwed.

There is no money under the mattress, but what might get me into trouble is that during the time I was charging up major debts, in addition to sinking all that money into a failing business, I was, of course living on it as well. Not sure if this would get me into trouble, but one good piece of news is that 99% of my debt is from two years ago or a little more. In other words, I have not been charging up rent, food, and utility money for over two years.

Oh, and all my student loans are presently in defferment/forebearance, so I am not paying them.

The fact that your debt is over 2 years old will help you avoid AP's from the creditors. That is very good. I think you have a doable chapter 7, but it is a complicated chapter 7. And I agree with the lawyer that you just talked to, that any lawyer that is quoting you "bankruptcy mill" prices (ie, $1,500) is not understanding the complexity of your case.

What I like about the lawyer you just talked to is that he was honest with you. He didn't quote you a artificially low price and then start charging you ala carte on the back end. In business I always trust people who set the proper expectations up front.

There is never any guarantee that the US trustee will get involved in a case, but in nyc they have a huge US trustee's office downtown. I didn't file in nyc because as a high income filer, I was told by my lawyer at the time that even though I passed the means test, I didn't stand a chance getting into a chapter 7 due to the super active US Trustee's office in nyc.

You are not a high income filer, but you are a high debt filer which is also a red flag.

[NSH]

Yeah, and THANK YOU so much for your posts, backtoschool! Right now I am literally shaking, as corny ass as that will sound. I can't even begin to imagine what the hell I will do if my petition for BK is denied. I don't even want to declare BK. I honestly and sincerely wish I had the means to pay everyone back or at least settle. So not only is this the most dismal failure of my entire life...and I have had some doozies, but nowI am wondering what the hell I do if the courts decide I simply owe too much money or was such a vagrant debtor that they want to make some kind of an example of me.

By the way, he also told me the same thing, that there is no guarantee that the US Trustee would become involved or to what extent they would if they do.

Well sorry for the whining, but this is more than scary, it is absolutely terrifying!

[backtoschool]

Yeah, and THANK YOU so much for your posts, backtoschool! Right now I am literally shaking, as corny ass as that will sound. I can't even begin to imagine what the hell I will do if my petition for BK is denied. I don't even want to declare BK. I honestly and sincerely wish I had the means to pay everyone back or at least settle. So not only is this the most dismal failure of my entire life...and I have had some doozies, but nowI am wondering what the hell I do if the courts decide I simply owe too much money or was such a vagrant debtor that they want to make some kind of an example of me.

By the way, he also told me the same thing, that there is no guarantee that the US Trustee would become involved or to what extent they would if they do.

Well sorry for the whining, but this is more than scary, it is absolutely terrifying!

I totally understand. I felt the same way of course right before I filed. I worked on Wall Street, so you can imagine how out of place I felt filing for bankruptcy.

You are taking steps towards rebuilding your future and are taking responsibility for your past (instead of just burying your head in the sand and ignoring it) by filing for bankruptcy. Finally dealing with this huge hairball of a mess will free you to pursue what you care about.

Don't predict failure. If you document every questionable transaction, and are honest, and take your time to file instead of rush and make silly mistakes, then you will get through this.

[NSH]

Thanks, again, backtoschool. By the way, what happens if they end up rejecting or dismissing my BK? Do I have to go through it all again and re-file? Is this a common thing to happen?

[backtoschool]

Thanks, again, backtoschool. By the way, what happens if they end up rejecting or dismissing my BK? Do I have to go through it all again and re-file? Is this a common thing to happen?

Unless they dismiss your case for fraud (which they will not I am sure) you can just refile. Sometimes there is a waiting period to refile, depending on how your case is dismissed.

Dismissals are somewhat rare and usually center on extremely high debt (much higher than yours), inadequate documentation, or expenses that the trustee deems "abusive" (high car payments, super high mortgages, private school tuition, etc...)

[NSH]

Just out of curiosity, what is considered super high debt? Because mine is in the hundreds of thousands, particularly counting the back taxes that I owe.

[backtoschool]

Just out of curiosity, what is considered super high debt? Because mine is in the hundreds of thousands, particularly counting the back taxes that I owe.

Well the Chapter 13 unsecured debt limit is $336,500 (it might have gone up a bit but that is what it was last year when I was considering bankruptcy in nyc and thought I might end up in a chapter 13)

Chapter 7 does not have an unsecured debt limit, but the US Trustee's office examine high debt filers very closely. Anything over 100k will get close scrutiny. Anything over the Chapter 13 debt limit of $336,500 will get really really close scrutiny.

[NSH]

Yeah well I am defintely over that, so I am sure I will be in for some very close scrutiny. What a nightmare! I suppose I deseve it, though. No, make that I definitely deserve it. Borrowing tons and tons of money over the course of 18 months in a horrible economy to try to keep a failing business (a gourmet style deli of all things) afloat is pretty damned stupid.