Stalled out chapter 7 asset case

[Backlyn]

Filed for chapter 7 on 10-21-09, 341 meeting 12-4. Trustee decided we were slightly over in assets due to me having title to my SUV. Answer to objection hearing scheduled end of Feb 10 and we get hit with a blizzard causing trustee to file continuance. Hearing rescheduled for 3-31 and then my lawyer files continuance and says he submitted a buy out offer to trustee. I looked on pacer and we have another hearing date on 4-27 now. I just started a new job and can't get time off from work so lawyer was supposed to be going to these hearings but as stated above, they haven't happened yet. Yesterday we got an offer from Capital One for a credit card and me and my husband were approved. We just want a little card to help start the rebuilding process and to have some small form of backup. My lawyer said today only I could apply for the card but not my husband. I am newly employed and my husband is self employed in a very slow period right now with construction. Any idea what this is about and is there anything wrong with what we did? Seems like this is never going to settle out and close. We are nearing our 6 month post filing window! How long can this drag out? I know discharge will come before closing but we had a buy out offer from GMAC for my husbands truck that lawyer said we can't touch yet. We keep paying a high loan every month, no clue if the trustee will accept the buy out. If he does take our offer, do we still need to attend another hearing?

Any advice is greatly appreciated.

[AngelinaCatHub]

We went two years nearly. Same deal with assets and the Trustee let us purchase our stuff at a reasonable price of one year no interest and less value than listed.

Be patient, but in my opinion, do NOT use that card. You must get Trustee's permission to incur new debt. (and why would you want to??).

Have your lawyer handle it, you are over your 341 so the hearing he can do on his own. You will be submitted an offer. You will not be discharged until you fulfill that offer but that is not bad as the automatic stay is in place. The close will take longer as the asset has to be disbursed. All is well. Sleep tight. 'Hub

[mtbc]

You must get Trustee's permission to incur new debt.

I've been curious about this rule -- can you say where in the USC it actually appears? I read relevant things in chapter 13 but I never came across it in any official chapter 7 source.

[AngelinaCatHub]

I've been curious about this rule -- can you say where in the USC it actually appears? I read relevant things in chapter 13 but I never came across it in any official chapter 7 source.

Actually no. This is what I have picked up here. However, that challenges me to investigate this to the legal standard, as I do not want to lead anyone astray. My personal feelings (which mean nothing) is debt got us here, why redo it? But you have a point. 'Hub

[BobMango]

Actually no. This is what I have picked up here. However, that challenges me to investigate this to the legal standard, as I do not want to lead anyone astray. My personal feelings (which mean nothing) is debt got us here, why redo it? But you have a point. 'Hub

I think this is where some folks have gotten restrictions that are associated with Chapter 13 confused with Chapter 7. In Chapter 7 there are no prohibitions on seeking and using new credit. I would certainly wait until the Trustee issues a report of no distribution, or have some other indication that you are not being targeted for a Chapter 13 before seeking new credit.

I applied for and received credit after my 341 (and trustee's report) but before discharge. No problems with trustee and discharge came right on time. Some people recommend that you apply for a new card before discharge, but I don't know if credit is easier before or after discharge.

[justbroke]

There is no per se rule which explicitly prohibits "new credit" in either Chapter 13 or Chapter 7 from a USC/Statutory point. The key issue though is "good faith". Most courts would consider acquiring new debt, whilst your current debt is not discharged... to be in bad faith. Bad faith is covered in 11 USC 707(b)(3)(A) for Chapter 7s. Would someone really file a bad faith dismissal motion for this... highly unlikely.

For Chapter 13s, it's covered in 11 USC 1307, but it's for not following the terms of the Order confirming the plan. Almost all Chapter 13 orders confirming the plan -- not the plan itself -- will contain language prohibiting or conditioning the use of credit.

Of course, the prudent thing to do is to wait until discharge.

[Backlyn]

I was assured we are not a target for 13, income still keeps us out of that ballpark. The issue is trying to settle out on assets with only one stable income. My husband's self employment in a very unstable construction industry makes it near impossible to pay out anything substantial on a regular basis. We have offered some surrendering of assets with $500 cash to see if he will accept it and move this along. Our fridge is acting up and we know its going to go and we have nothing to use in an emergency. I am in no desire to get back in credit card debt but with the unstable nature of my husband's job, it would be great to have a card for emergency and we do want to attempt to modify our mortgage down the road.