Update with Motion to Dimiss/UST/Question

[LJoutWest]

Well, a week ago today (Jan. 8th) our attorney filed our response to the UST's motion to dismiss or convert. We haven't heard anything until today. Our attorney sent us email late (before he was leaving for the weekend) that our meeting on Feb. 1st was stricken without a new date set. The hearing was scheduled for about 5 minutes and our attorney feels that the UST was just planning on us showing up and then converting. Our date when we are suppose to done (forget what it is called) is Jan. 19th, Tuesday.

So my question is this since our attorney is not around until Sunday night. Is it a good thing that the hearing was stricken with no new hearing set (yet)? Is there a limit to how long we go before the UST can withdraw their motion to dismiss or do you think that the UST is just gathering time to respond to our motion? What would be the next step, for our attorney and the attorney for the UST to present arguments before the Court and the Judge? How long before you think we hear back from the UST?

To review. We filed over the median for a chapter 7 based on our attorney and at our 341 on Nov 21st, 2009, the UST showed up with several concerns. Our attorney had reported our income as our net income not as our gross, and a couple of other items. We refiled an amended B22A and Schedule J & I. Two weeks later the UST filed for a Presumption of Abuse, and three weeks later filed for a motion to dismiss or convert; setting a 5 minute meeting on Feb. 1st which we suppose was to have us agree to convert. We had until January 11th to respond and on January 8th our attorney filed the response. Today the meeting was stricken with no new date set as of now. Our date to close is January 19th, 2010. So we are playing the waiting game.

[klandsb]

Just curious how much over the median were you ??? From other post I assume that your paperwork was scrutinized more ... Wondering if the mistakes may have brought even more attention to everything else. I feel your pain.. It must be nerve wracking not knowing what is going on..... There is nothing you can do until your attorney gets back so try and not let your mind go crazy with the wonder if's.... I know its easier said then done.

[LJoutWest]

Not really concerned because in the end what I think is that the UST is going to fight and it will be up to the Judge over our case. If it is different that will be a nice surprise. So how much over the median? Significant, about $14k before taking out expenses on the B22a and the I & J schedules. After expenses, anywhere from -$922 which is increasing now because I have to have some major dental work done to keep my teeth and on going dental treatment that insurance will only cover a portion. Do I think the other mistakes keyed the UST? Nope. From what I now understand if your over the median the UST will almost, almost always consider your case to see if it should be dismissed or converted to a Chapter 13. We would have been on their target list no matter what. The initial mistake on the income I think heightened their scrutiny of our case. Now it depends how good the arguments are our lawyer made in our reply.

[topekajack]

How can they move you into a 13 when you have -$922 every month?

[LJoutWest]

They dispute some of the claims our attorney put down. They are trying to show that we did not pass the means test in our B22A (we surrendered our home which was not in foreclosure but has been taken back now) and sub the IRS allowed expense for housing there. Our attorney argued case law against them doing that. They also dispute some of our expenses which in their mind drives us to around a positive $500 to $700 a month payment. Our attorney argued case law and should win on most points but will probably lose on one or two. However because I was diagnosed with Celiac disease and have on going health issues related to that disease and expenses that produced a special circumstance. He also made other arguments based on case law for the other expenses. Now we wait. The strikening of the meeting was normal and we wait to see what the UST wants to do. I expect them to reply and probably interview us in a session with the UST lawyer and our lawyer. We'll see what they decide to do soon I hope.

[topekajack]

My wife also has Celiac. I'm sure that our UST will dispute our food and medical expenses. It is amazing how much we pay in groceries every month because Celiac. I hope that they are understanding. Good luck to you.

[justbroke]

They are trying to show that we did not pass the means test in our B22A (we surrendered our home which was not in foreclosure but has been taken back now) and sub the IRS allowed expense for housing there. Our attorney argued case law against them doing that.

This is a classic "Totality of Circumstances" reason for the Trustee to file an 11 USC 707(b)(3)(B) motion to dismiss or convert. When you surrender property that is putting you into a negative disposable income, the UST is going to pounce in most cases (especially in over-the-median cases).

If the UST is arguing 11 USC 707(b)(1) or (b)(2) as if there's a presumption of abuse or abuse due to the Means Test... then yes, your attorney is correct that there is plenty of caselaw that shows that you can claim surrendered property on the Means Test. However, this defense and caselaw fall apart under a Totality of Circumstances review.

I can see why the UST thinks he has a case.

[Kingxray]

This is a classic "Totality of Circumstances" reason for the Trustee to file an 11 USC 707(b)(3)(B) motion to dismiss or convert. When you surrender property that is putting you into a negative disposable income, the UST is going to pounce in most cases (especially in over-the-median cases).

If the UST is arguing 11 USC 707(b)(1) or (b)(2) as if there's a presumption of abuse or abuse due to the Means Test... then yes, your attorney is correct that there is plenty of caselaw that shows that you can claim surrendered property on the Means Test. However, this defense and caselaw fall apart under a Totality of Circumstances review.

I can see why the UST thinks he has a case.

I don't mean to rob the thread, but it is so ironic that I saw your statement. When we first filed we included our primary residence and the house we were surrenering (because it wouldn't sell) on our means test and the UST wouldn't accept it and filed a motion to dismiss (707). We dismissed our case and refiled and did not include the house we were surrendering on our means test. This time the UST filed a motion to dismiss claiming we were surrendering both houses (we're not). The UST told us to file an amended means test to include the house we were surrendering and they would allow it. We had a different UST for each filing. Isn't that ironic? Their case for Totality of Circumstance cannot be that strong if one UST allows it and another does not. Don't you agree?

[justbroke]

When we first filed we included our primary residence and the house we were surrenering (because it wouldn't sell) on our means test and the UST wouldn't accept it and filed a motion to dismiss (707)...

We dismissed our case and refiled and did not include the house we were surrendering on our means test. This time the UST filed a motion to dismiss claiming we were surrendering both houses (we're not).

I think your two USTs each attacked your petition on two different fronts. Many USTs will, mistakenly, attack the Means Test when they should be attacking the totality of circumstances. However, they use this as a ruse, if you ask me. I feel that a smart UST would never attack the Means Test under 707(b) or for "abuse". They will always go for the jugular... via the Totality of Circumstances.

I don't know why more attorneys don't fight the 707(b) motions to dismiss due to the Means Test. There is pretty good caselaw on that topic. Everything counts on the means test in the supermajority of Districts.

[LJoutWest]

This is a classic "Totality of Circumstances" reason for the Trustee to file an 11 USC 707(b)(3)(B) motion to dismiss or convert. When you surrender property that is putting you into a negative disposable income, the UST is going to pounce in most cases (especially in over-the-median cases).

If the UST is arguing 11 USC 707(b)(1) or (b)(2) as if there's a presumption of abuse or abuse due to the Means Test... then yes, your attorney is correct that there is plenty of caselaw that shows that you can claim surrendered property on the Means Test. However, this defense and caselaw fall apart under a Totality of Circumstances review.

I can see why the UST thinks he has a case.

Actually the UST is attacking all three; USC 707(b)(1), (b)(2) and 707(b)(3)(B) and thus why our attorney does have plenty of caselaw to claim that we can claim the surrendered property on the Means Test. Then if you look at his other arguments they counter the claims on USC 707(3)(B) except for one area I'm sure of, and possibly two. But even taken those out we still have a negative DMI. So like we say, were just waiting for the response now.

[justbroke]

Actually the UST is attacking all three; USC 707(b)(1), (b)(2) and 707(b)(3)(B) and thus why our attorney does have plenty of caselaw to claim that we can claim the surrendered property on the Means Test. Then if you look at his other arguments they counter the claims on USC 707(3)(B) except for one area I'm sure of, and possibly two. But even taken those out we still have a negative DMI. So like we say, were just waiting for the response now.

Oh, if you still have negative DMI after adjusting your Schedule J to reflect the surrender of the secured property... then I don't see any problems. If the UST made that type of mistake, that was just dumb on their part.

I'm glad that you're fighting the motion. I will learn something from it.