Discharged & Closed?

[DanaS]

I received a letter yesterday from the Court which said my case was discharged the end of December 2005, but no wording about "closed"? I received a letter from my Attorney today which said quote:

"The Court has issued a discharge in your Chapte 7 Bankruptcy case... The discharge also closes your Bankruptcy case; therefore, my representation of you has now ended."

However, I have a Court hearing scheduled for next Tuesday where the Trustee has challenged $6500 worth of old business equipment (tools of my trade) which he is claiming should be non-exempt. If I still have a hearing coming up, how can the case be "closed" as my Attorney states? Does this mean I am just supposed to show up at court next Tuesday and represent myself now?

[bkfiler]

ummm, no. contact your attorney and speak with him. he can clear this up.

after 30 days of the 341 no one is supposed to be allowed to challange your exemptions. but thats a goverment rule and imo they can do anything they want.

as far as your attorney was concerned your case with him was closed. he was letting you know formally he is not representing you. its time to go back to him and ask him what this is all about. dont worry. hes there for you.

let us know what the heck is going on here when you find out.

[Genenco]

Take along some encouragement (Your choice of caliber will suffice) if the bugger says "Oh I'm done"

Hee hee hee.....

[JimH]

If I understand what others have said before, the trustee can re-evaluate a bk for up to a year if he stumbles upon undisclosed information. From your other post, it sounds like he either missed the fact or wasn't told that your tools of the trade, which you claimed at the full $6,500 exemption, were actually held in an S-corp, which would make them non-exempt. I believe that is why you are going to court Tues.

He is all excited because he thinks he can get his hands on an easy $6,500 worth of assets. This is all going to go away after the trustee finds out that the tools of your trade that you listed as the full $6,500 exemption is only a bunch of old computer equipment.

Don't worry about it.

[DanaS]

Again, all, thanks for the responses. Very nerve-racking as I am sure you know.

JimH, the Trustee has been advised of what the equipment in question represents and still apparently wants it?

I think what really may have messed me up in the beginning is that one of the things that I do for a living is build rich-media web sites. I spent nearly one year (a couple years ago) building a web site for my graphic design/photography business which used the company name as the Domain name. It was a 100% Flash site with over 300 animated sections and over 3,500 examples of my graphics work. On the home page it was basically just my photograph (since I am a one-man operation). I never listed the site on any search engines purposely (since in the past I have only worked by referral) - it was built with the purpose of being an example to potential web site clients that I would direct there in person to demonstrate what I could do for them if they had the budget. One of the sections on that site was a "For Sale" section. In this section I placed about 15 photos of retired pieces of computer equipment I had laying around collecting dust along with optimistic pricing (did not want to say they were worthless). Since day one I never had a single inquiry from the web site of anyone interested in buying a single piece of this mostly obsolete equipment and did not expect to. Anyway that old equipment sat there on that section of the site without an update for the past two years - no reason to take it off or lower the prices since I never expected a buyer anyway - it was purely to show potential clients that I could build them a similar section on their site if they wanted one.

Well, sure enough, that was the first place the Trustee's office went to gather information about me. It is not that I did not think of this prior to filing and it would only have taken me one mouse click to take the site offline (I really didn't need it anyway since it was really not for public access), but I didn't. I was well aware of this used equipment section still being on there from two years earlier, but I figured if there was a question that the Trustee would contact me and I could explain that this was a promotional site - never got the chance. It was not 24 hours after I filed for Chapter 7 that the Trustee's office had found the web site and dug down to the lowest level to find that section - pretty impressive since you could spend 4 hours on that site and never see everything. The day after I filed the Trustee's office drafted a letter to me that I was not listing all my equipment on the schedule. In truth, most of the retired equipment on my site was not worth one-dollar, but as I recall the posted asking prices probably totaled $5000-$6000 - especially since they were over two years old. Some of that equipment listed for hundreds of dollars met with my dumpster out back nearly two years ago and today what I have left of it is worthless and the Trustee would be welcome to it. In fact, if my case is closed one of my first orders of business is to throw out all this old worthless equipment taking up space - you cannot even GIVE it away.

After I received the letter from the Trustee, my Attorney drafted a response explaining the situation to the Trustee with a detailed explaination of each piece of equipment listed on the site for sale. I never got a response from the Trustee and he never brought it up at the 341 so I assumed it was answered to his satisfaction.

The moral of all this is that if you are filing Chapter 7:
(1) Don't have a web site.
(2) If you do - make sure it is not impressive.
(3) If it states anything with a dollar sign attached to it make sure the amounts are up-to-date and realistic.
(4) Don't use your name or your company name in the URL or Meta-tags

In my opinion, my impressive web site is what may have been at the heart of all my problems in this case - it made me look like Steve Jobs, when in fact all the money I have made for the past 15 years went to Steve Jobs. Immediately after the first letter from the Trustee, I removed all the two year old For Sale section on my site with a notice that it was undergoing updating to more current information. After the 341 when the Trustee sent me the letter saying he was pursuing ALL my equipment, I finally pulled my site completely. Lucky, I never used it to bring in any business!

Even the $6500 total I (conservatively) estimated for viable equipment has dropped in value at least $2000 just since September when I filed! Not one item I own is still even being offered for sale by the manufacturers!

[JimH]

Well that sounds like a really unfortunate event. The good thing is it sounds like your atty is fully aware of the issue at hand. Interested to hear how this turns out.

[bkfiler]

yep, that is a great story. goes to show people just how greedy the trustees are. they get visions of dollars dancing in their heads and BAM, they are on you like flys to honey.

the good news is there is nothing for them to get so they wasted their time

[DanaS]

New wrinkle.

I met with my Attorney yesterday and he found that one of the credit lines I listed as unsecured was actually secured with a blanket UCC filing online (I had forgotten about agreeing to this securing statement five years ago). The security was listed as all business equipment, accounts receivable and anything else the corporation has as assets. Therefore, it now appears that one of my creditors that I owed over $20,000 to has claim to my old equipment first before the Trustee. Therefore, my Attorney thinks that when the Trustee sees this that he may drop the Court hearing altogether? Of course I will have a separate battle perhaps ahead dealing with the bank in question, but it looks like this might satisfy the Trustee hopefully.

According to my Attorney my case is Discharged and Closed and yet we still have a scheduled hearing in court at this point? Confusing to me.

[robivi3]

Danas,
I dealt with similar issues. The Trustee does not want your equipment. He is looking for money. Small asset cases are currently valued by the Trustee for paying the Office Bills while waiting on the big cases.

His Attorney will be at the hearing. I imagine you've been deposed already. He will be on the phone with the Trustee most likely. Our issue was over a similar amount. We refused and the Trustee dropped the case the minute we were called and my case went to closing (it will take months). If you lightly agree to his terms he has you. Counter with a ridiculously low offer, I had a DAMNED good Attorney, and he may drop it. The issue of it being secured by another creditor will likely stop the action altogether. Yes, you may have problems with the Bank later or you may not. Hold on to the items you have in that case and attempt to return what you can, no matter the condition. I did this with my Credit Card Machines and even though it was humiliating to return them (they were in perfect shape) the offer was seen as "good faith" and they removed everything from my Credit Report as, I guess a kindness.

[bkfiler]

dana, not sure if you know about this site or not but he seems to have dealt with this type of problem. try posting you info about it and see what he says:

also, search for 'lien' and 'ucc' and 'secured'. read what he has put already.

http://www.mcfarlinlaw.com/phpbb/viewforum.php?f=1&topicdays=0&start=0

[DanaS]

bjfiler,

Thnaks for the link - I will check it out.

[JimH]

So Dana, Did you have your day in court?

[DanaS]

Well, I don't feel comfortable discussing the result of the Court Hearing this week publicly - especilally since I am still steaming. Let's just say the Trustee won his case by threatening me with additional legal action (totally unfounded and untrue) one hour prior to the hearing and I settled out of court for a few thousand dollars. My guess is that my lawyer was either psyched out by the Trustee or not a "trial" attorney - either way I got hosed. I just want this damn thing to end. I don't have the money to pay the Trustee, but I have 30 days to get it somewhere and one way or another I will find a way to get it.

I am not chapped so much about the money (if it had been legitimate or would have made a difference to creditors, but not a single creditor filed a response) as I am the way the case was won. This is the first time in my life I have ever been accused of doing something "illegal" or underhanded and nothing could be futher from the truth. If I were feeling as healthy as I was 3 years ago, I would have taken him on, but I am too tired, sick and beaten down to fight a losing battle. This just reminded me of the school bully that extracts insurance money from you in exchange for not beating you up - he not only had no evidence of his accusations, but there was no foundation for his accusations. I finally just had to realize that he is just after money and one excuse is as good as the next.

All I know is that the system is too big for me to conquer. I am greatful for the fact that I have been discharged from so much credit card debt (if what I have been told is true and it is really gone), but the fact remains that I sought out Chapter 7 for "relief" and before it is all said an done this will probably cost me over $10,000, not including lost business (none of which went to creditors) and all I had was a few bucks left in my pocket the day I filed.

I tried to imagine everything that could possibly go wrong for months and as usual I missed worrying about the one thing that did happen!

[JimH]

Too bad he got you for an additional $3,000. You did the right thing by settling - afterall it's better to just have it over with.

[DanaS]

Did I say $3000?