Turning over house to trustee - why does filing draft say "property retained" etc??

[KevFinnerty]

I am filing Chpt 7.

I have other threads/questions up here explaining this is more detail but short story for purposes of specific questions here is:

- I have over 120k in unsecured debt that I have stopped paying (I have basically no $$ and no job, just selling possessions to stay alive). Those debts are escalating from collections into lawsuits etc.

- Foreclosure has already been filed on my house, about 1 month ago.

- I owe 75k on my mortgage, but have equity in the house since in theory if spruced up the house *could* sell for $180-220k. As is it *could* sell for around 160k. Of course the market is so bad, and with foreclosure started, I can't get anything for it (and the "investor" vultures are already circling).

- What I want the Chpt 7 to do is to have the trustee take my house, sell it, pay off the mortgage, give me my homestead exemption ($20k), use the rest to settle all my other debts and wipe them out if not paid etc so I can start my life over.

- I have a lawyer who is doing my Chpt 7 filing. We "discussed" my case (long story I think he doesn't give 2 shits but I am stuck with him). His office prepared the Chpt 7 filing papers for me to sign. I am going over that now. I see much that is missing or wrong that is easy for me to catch and have them correct before I sign it. However I see 2 major things relating to my house that seem wrong to me but I am not a bankruptcy lawyer so maybe I just don't understand. I'd appreciate some insight into this before I go back in to discuss this and risk being "handled" (ie: told something wrong mistakenly or even on purpose just to get me to sign the forms as is).

(1) On the first page of the form, there is a section called "Statistical/Administration Information". Inside there the box next to "Debtor estimates that funds will be available for distribution to unsecured creditors" is NOT checked. The box next to "Debtor estimates that, after any exempt property is excluded and administrative expenses paid, there will be no funds available for distribution to unsecured creditors" IS CHECKED. Yet I do NOT agree with this. Why would this be filled out this way?? If the trustee takes and sells my house, he should have plenty left over to take a cut, give me my exemption, pay off the mortgage, then give something to my creditors. Any explanations??? I have heard that giving a trustee an asset basically gives him a license to "burn through it" and nothing will be left of it, but jesus christ we are talking about say $75,000 here. I'm not going to act like I EXPECT all of that to be eaten up as "administrative costs". Or what am I not understanding??

(2) About 20 pages in there is a section called "CHPT 7 INDIVIDUAL DEBTOR'S STATEMENT OF INTENTION". Part A has a section for "property #1". This is referred to as "debts secured by property of the estate". It lists my house there. Ok so far. Then there is a question of "Property will be" with 2 choices - one being "Surrendered" and the other being "Retained".

Beneath that it is says "If retaining the property, I intend to (Check at least one): Redeem the property, Reaffirm the debt, or Other/Explain".

Then beneath that it has a section for "Property is (check one)" either "Claimed as exempt" or "Not claimed as Exempt".

Knowing my situation, logic tells me that all of this should be filled out as "PROPERTY WILL BE SURRENDERED", the "if retaining..." part would be not filled out, and the "Property is" part should have "Claimed as Exempt" (in order to get my homestead exemption for it).

In other words, go ahead and take the house Mr. Trustee, sell it, give me my exemption, settle whatever debts you can, clear out the rest etc.

Yet amazingly...and confoundingly to me, the option filled out is PROPERTY WILL BE RETAINED. And the corresponding section for "if retaining the property" HAS NOTHING FILLED OUT. But at least the part for "Property is EXEMPT" is checked.

Can anyone explain to me for my situation HOW this area should be filled out - and what if any explanation could there be for having the lawyer fill it out the way he did?? (Or should I say, his secretary filled it out the way she did??)

Thanks very much for any useful replies. As I stated in a different thread I am stuck with a lawyer who is handling my case for 1/2 price and realized from our initial meeting that I will have to go over everything he says/does as thoroughly as possible to protect my own interests.

[despritfreya]

In response to:

""Statistical/Administration Information". Inside there the box next to "Debtor estimates that funds will be available for distribution to unsecured creditors" is NOT checked. . .Why would this be filled out this way?? If the trustee takes and sells my house, he should have plenty left over to take a cut. . ."

This is why you have an attny. He knows the simple answer.

1. The computer program will "default" to this response for Chapter 7's
2. The initial Notice that is sent out by the Court will state this is a "no asset case. . do not file claims unless notified to do so".
3. If and when the Trustee has or is about to have $$ to send out, the Trustee will send out a Notice of Claims Bar date advising creditors that this will be an asset case. Until that happens your case IS a "no asset" case.

In response to

"Yet amazingly...and confoundingly to me, the option filled out is PROPERTY WILL BE RETAINED"

Once again, your attny is correct. The Statement of Intentions has NOTHING to do with the Trustee but has EVERYTHING to do with the mortgage holder. For now (if and until the Trustee sells the property) are you not "retaining" the home? You are not "surrendering" it to the creditor, are you?

Clearly your attorney knows what he is doing. That is why you hired him.

Des.

[tobee43]

I am filing Chpt 7.

I have other threads/questions up here explaining this is more detail but short story for purposes of specific questions here is:

- I have over 120k in unsecured debt that I have stopped paying (I have basically no $$ and no job, just selling possessions to stay alive). Those debts are escalating from collections into lawsuits etc.

- Foreclosure has already been filed on my house, about 1 month ago.

- I owe 75k on my mortgage, but have equity in the house since in theory if spruced up the house *could* sell for $180-220k. As is it *could* sell for around 160k. Of course the market is so bad, and with foreclosure started, I can't get anything for it (and the "investor" vultures are already circling).

- What I want the Chpt 7 to do is to have the trustee take my house, sell it, pay off the mortgage, give me my homestead exemption ($20k), use the rest to settle all my other debts and wipe them out if not paid etc so I can start my life over.

- I have a lawyer who is doing my Chpt 7 filing. We "discussed" my case (long story I think he doesn't give 2 shits but I am stuck with him). His office prepared the Chpt 7 filing papers for me to sign. I am going over that now. I see much that is missing or wrong that is easy for me to catch and have them correct before I sign it. However I see 2 major things relating to my house that seem wrong to me but I am not a bankruptcy lawyer so maybe I just don't understand. I'd appreciate some insight into this before I go back in to discuss this and risk being "handled" (ie: told something wrong mistakenly or even on purpose just to get me to sign the forms as is).

(1) On the first page of the form, there is a section called "Statistical/Administration Information". Inside there the box next to "Debtor estimates that funds will be available for distribution to unsecured creditors" is NOT checked. The box next to "Debtor estimates that, after any exempt property is excluded and administrative expenses paid, there will be no funds available for distribution to unsecured creditors" IS CHECKED. Yet I do NOT agree with this. Why would this be filled out this way?? If the trustee takes and sells my house, he should have plenty left over to take a cut, give me my exemption, pay off the mortgage, then give something to my creditors. Any explanations??? I have heard that giving a trustee an asset basically gives him a license to "burn through it" and nothing will be left of it, but jesus christ we are talking about say $75,000 here. I'm not going to act like I EXPECT all of that to be eaten up as "administrative costs". Or what am I not understanding??

(2) About 20 pages in there is a section called "CHPT 7 INDIVIDUAL DEBTOR'S STATEMENT OF INTENTION". Part A has a section for "property #1". This is referred to as "debts secured by property of the estate". It lists my house there. Ok so far. Then there is a question of "Property will be" with 2 choices - one being "Surrendered" and the other being "Retained".

Beneath that it is says "If retaining the property, I intend to (Check at least one): Redeem the property, Reaffirm the debt, or Other/Explain".

Then beneath that it has a section for "Property is (check one)" either "Claimed as exempt" or "Not claimed as Exempt".

Knowing my situation, logic tells me that all of this should be filled out as "PROPERTY WILL BE SURRENDERED", the "if retaining..." part would be not filled out, and the "Property is" part should have "Claimed as Exempt" (in order to get my homestead exemption for it).

In other words, go ahead and take the house Mr. Trustee, sell it, give me my exemption, settle whatever debts you can, clear out the rest etc.

Yet amazingly...and confoundingly to me, the option filled out is PROPERTY WILL BE RETAINED. And the corresponding section for "if retaining the property" HAS NOTHING FILLED OUT. But at least the part for "Property is EXEMPT" is checked.

Can anyone explain to me for my situation HOW this area should be filled out - and what if any explanation could there be for having the lawyer fill it out the way he did?? (Or should I say, his secretary filled it out the way she did??)

Thanks very much for any useful replies. As I stated in a different thread I am stuck with a lawyer who is handling my case for 1/2 price and realized from our initial meeting that I will have to go over everything he says/does as thoroughly as possible to protect my own interests.

i understand your feeling about your atty. most atty's these situations are simply "cut" and "dry" for them.

ask him or her...STOP...please explain to me WHY...just tell them you are the type of person that needs a bit more clarification of why and what is happening.

while this is most likely your first time doing this...they are use to dealing with situations such as yours, on a daily basis. sometimes they do forget there's actually a "human" on the other side...(maybe with DES being the ONLY exception.... ), however it does happen.

speak up...tell them you just need to understand. i'm certain someone whether it's the atty or paralegal will explain why they are suggesting what they are doing is best for you.

[KevFinnerty]

Yes, that is exactly what I am planning on doing. I am going back there this afternoon. However I hoped someone up here might be able to explain if there was any legitimate reason for the way they filled this out - or what in their opinion (and why) it should be filled out a different way, so that I am not sold on something by the atty that is not in my best interests. Based on the first interview, I have little or no faith in this atty to proceed in my best interests (unless he proves my impression wrong), and wanted to be armed with more knowledge before I go back in today. I will ask and see what they say. If it does not make sense to me then I will not sign anything and research it more.

[tobee43]

Yes, that is exactly what I am planning on doing. I am going back there this afternoon. However I hoped someone up here might be able to explain if there was any legitimate reason for the way they filled this out - or what in their opinion (and why) it should be filled out a different way, so that I am not sold on something by the atty that is not in my best interests. Based on the first interview, I have little or no faith in this atty to proceed in my best interests (unless he proves my impression wrong), and wanted to be armed with more knowledge before I go back in today. I will ask and see what they say. If it does not make sense to me then I will not sign anything and research it more.

kev....first i would be extremely confident in what DES..has told you... des..maybe ONE of the only persons i personally feel that would give me the correct information on this forum. there are many excellent participants on this forum, however, despritfreya is one that i would take the words as true as they can get...and i'm not really wanting to blow anyone's horn...it's just that i have done enough reading of posts and threads to know that the answers that des gives are mostly right on target than many other responses you will receive.

This is why you have an atty. He knows the simple answer.

1. The computer program will "default" to this response for Chapter W's
2. The initial Notice that is sent out by the Court will state this is a "no asset case. . do not file claims unless notified to do so".
3. If and when the Trustee has or is about to have $$ to send out, the Trustee will send out a Notice of Claims Bar date advising creditors that this will be an asset case. Until that happens your case IS a "no asset" case.

In response to

"Yet amazingly...and confounding to me, the option filled out is PROPERTY WILL BE RETAINED"

Once again, your Attn is correct. The Statement of Intentions has NOTHING to do with the Trustee but has EVERYTHING to do with the mortgage holder. For now (if and until the Trustee sells the property) are you not "retaining" the home? You are not "surrendering" it to the creditor, are you?

Clearly your attorney knows what he is doing. That is why you hired him.

Des.

secondly...i'm glad you are calling or going there and expect and should be made to feel secure, actually MUST feel secure, about the decision that are being made on your behalf.

[despritfreya]

kev....first i would be extremely confident in what DES..has told you... des..maybe ONE of the only persons i personally feel that would give me the correct information on this forum. there are many excellent participants on this forum, however, despritfreya is one that i would take the words as true as they can get...and i'm not really wanting to blow anyone's horn...it's just that i have done enough reading of posts and threads to know that the answers that des gives are mostly right on target than many other responses you will receive.

Thank you TB43 but I will be the 1st to admit that I am not always correct and will always admit my mistakes. I have done so on this forum more than once. I have learned a lot over the past few months. That is why I keep coming back.

Des.

[tobee43]

Thank you TB43 but I will be the 1st to admit that I am not always correct and will always admit my mistakes. I have done so on this forum more than once. I have learned a lot over the past few months. That is why I keep coming back.

Des.

des...if we stop learning everyday we are in big trouble. i would expect we are all entitled to our mistakes...we have all made them.

it's good you keep coming back!! you just need to know it helps many...i for one just wanted you to know i appreciated it....(LOL!!! and so should the OP)

[KevFinnerty]

kev....first i would be extremely confident in what DES..has told you... des..maybe ONE of the only persons i personally feel that would give me the correct information on this forum. there are many excellent participants on this forum, however, despritfreya is one that i would take the words as true as they can get...and i'm not really wanting to blow anyone's horn...it's just that i have done enough reading of posts and threads to know that the answers that des gives are mostly right on target than many other responses you will receive.







secondly...i'm glad you are calling or going there and expect and should be made to feel secure, actually MUST feel secure, about the decision that are being made on your behalf.

Thanks (to both of you), and don't think I am not grateful for any replies at all but - I must be losing my mind. I was replying to a post that was there that only said something about "go talk to your atty and work it out". What DES said above was NOT IN THIS THREAD! What I see there now is not what was there when I replied (???).

Wait - now I realize what happened. I did not see DES' reply above yours. I was just replying to what you said about asking questions of the atty etc.

Anywho, I want to read over what DES & you (tobee) are saying and I'll reply to that.

[KevFinnerty]

In response to:

""Statistical/Administration Information". Inside there the box next to "Debtor estimates that funds will be available for distribution to unsecured creditors" is NOT checked. . .Why would this be filled out this way?? If the trustee takes and sells my house, he should have plenty left over to take a cut. . ."

This is why you have an attny. He knows the simple answer.

1. The computer program will "default" to this response for Chapter 7's
2. The initial Notice that is sent out by the Court will state this is a "no asset case. . do not file claims unless notified to do so".
3. If and when the Trustee has or is about to have $$ to send out, the Trustee will send out a Notice of Claims Bar date advising creditors that this will be an asset case. Until that happens your case IS a "no asset" case.

In response to

"Yet amazingly...and confoundingly to me, the option filled out is PROPERTY WILL BE RETAINED"

Once again, your attny is correct. The Statement of Intentions has NOTHING to do with the Trustee but has EVERYTHING to do with the mortgage holder. For now (if and until the Trustee sells the property) are you not "retaining" the home? You are not "surrendering" it to the creditor, are you?

Clearly your attorney knows what he is doing. That is why you hired him.

Des.

Thanks for that - reading what you said (not knowing what I found out about 30 minutes ago talking to the atty's assistant) I would have been very reassured to read what you're saying.

But get this - I spoke to the assistant that filled out the schedules/forms. Asked her my questions above etc. She had no concept that I want to give up my house to the trustee to sell and use the proceeds to pay off the mortgage, give me $$ from the homestead exemption, and pay off the creditors to some degree. She filled things out assuming that I have no equity in it (despite the fact if she had simply looked at the numbers she would have seen in her own responses in the form that I owe $75k and house is "worth" much more than that). She said the atty didn't tell her anything that we spoke of regarding this & she filled this out as per the majority of the forms (no equity, no assets). She said she would speak to the atty but agreed with me that it should be filled out the way I said above. So if what you are saying is true, then she gave me the wrong advice in filling out the form today after learning of the facts, yet it was filled out right only by mistake last week when she didn't know anything. Sigh.

She did mention new things the atty did not tell me, about how they should wait and not even file until almost the last minute (when the sheriff sale is about to start), if I want to stay in the house longer.

Although I still don't understand some of what you said - because my house IS an asset. To not show it as one defeats what I am trying to do as far as giving it up for the trustee to sell & give me my exemption, as opposed to letting the mortgage co take it and me (or the creditors) not getting anything (???) from it.

I think I need to start another thread up here. Ask if there is anyone else who gave up a house with equity to trustee because they themselves were unable to sell it and how exactly that all works. Because judging from responses I get not just here but even from the lawyers & admin people, it seems like I am navigating uncharted waters here despite the fact that I did not think of this on my own - I read it in a book about fighting foreclosure, and how this is one of the ways to not lose all your equity (you get the homestead exemption without all the hassles/problems of trying to sell the house, no complications that I have no as far as not being able to sell it since foreclosure has started etc etc etc).

[despritfreya]

Several years ago I filed a case for a client. She had 2 houses, 1 she lived in and 1 that had been a rental. She wanted both sold to pay 100% of her creditors but wanted the Trustee to sell her residence 1st. If the sale of the residence produced enough to pay all creditors she would keep the rental. Note that she WAS current with all mortgages and remained current through-out. Yes, this was an unusual case.

The bk program (at least the one I use) defaults to show there are no assets but you can manually change it to show there are assets. We did this. The notice initially sent to creditors by the Court stated that it was a no-asset case.

The statement of intentions showed that the debtor was going to retain both properties. Really did not matter as any attempt to lift the stay on either property by the lender would have been met with an objection by both the Trustee and the debtor.

In the end, my client found a buyer for her home. The sales price was enough to give her the allowed homestead and pay all allowed claims. Since we cooperated fully with the Trustee he did not hire an attorney so there was more to spread around. Just prior to filing the Application to Sell the Trustee sent notices to creditors telling them that they had to file claims. Those claims were paid and in the end, the rental property was returned to my client.

Now, you might ask why she did not just sell the property and avoid the bk since she had sufficient assets. Well she was facing a myriad of law suits and tax claims. She needed the protection of the bk to stop the collection efforts while she was given time to liquidate assets.

Des.

[KevFinnerty]

Thanks Des. That is similar to my case in that I also am facing a myriad of upcoming lawsuits by my creditors (not counting the foreclosure which is a huge factor for me, adding time critical components plus removing any fair $ buyers of my house), which is another big reason why am I pursuing bk. I just want everything to stop, all the collection phone calls, the impending lawsuits, the foreclosure etc. Even if I could sell my house (which I doubt), I will be relocating out of state to move in with a relative (sister) to try to rebuild my life and cannot see how I will be able to do that with all the other debt that I have, the other creditors chasing me etc. I can't have my sister's house deluged with phone calls from creditors after I move. All of this factors into my decision of BK. My #1 preference would be to sell the house then settle my debts but I just can't see it working out, and I don't have the strength to deal with all of it. Just take my house already (trustee), settle/clear out my debts, let me start over fresh. The best of the bad choices I have left from what I can figure out.

[tobee43]

Thanks (to both of you), and don't think I am not grateful for any replies at all but - I must be losing my mind. I was replying to a post that was there that only said something about "go talk to your atty and work it out". What DES said above was NOT IN THIS THREAD! What I see there now is not what was there when I replied (???).

Wait - now I realize what happened. I did not see DES' reply above yours. I was just replying to what you said about asking questions of the atty etc.

Anywho, I want to read over what DES & you (tobee) are saying and I'll reply to that.

your not going crazy Kev...they have been working on the site here and there and the same exact thing has happened to me...i see it there and then it's gone...or know it's there and it's NOT!! LOL

best of luck with your situation....make certain you keep in touch.. there is great support on this forum!!

[KevFinnerty]

To update this after talking to my paralegal (also was discussing it in another thread).

I think DES's first post is about right.

For (1), saying there is nothing to distribute is supposed to be set that way for Chpt 7's. Then the trustee decides if/what assets are available to distribute after going over the case. You only check the first choice saying that funds will be available if you are going Chpt 13. At least that is how it was just explained to me.


For (2), although I don't have a great understanding of this, the paralegal was adamant that I should not say I want to "surrender" the house. Instead I say I am retaining it, but then I leave the 2nd part of that NOT filled out (where you explain your retaining intentions) and leave that up to the trustee to decide if he is going to take it or not.

Although it was not explained to me fully, I think now that if you say "surrendered" in regards to the asset (my house in this case) then the trustee gets to take it without any regards to you getting part (or all) of it in an exemption. So you say you want to retain it even if you know you can't, in order to get the exemption if the trustee takes it. At least that is how I am interpreting it now.

And if the trustee decides he doesn't want to take the house and try to sell it, then the bank gets it. If that happens then I need to investigate an entirely different issue, which would be what if the bank sells it for MORE than what they are owed. As far as I understand, I am entitled to anything above what I owe them, but some type of legal process has to then be driven by me to get any of that $$ from the bank. Complicated by the creditors also wanting some of that....

[despritfreya]

In response to:

"Although it was not explained to me fully, I think now that if you say "surrendered" in regards to the asset (my house in this case) then the trustee gets to take it without any regards to you getting part (or all) of it in an exemption."

Not quite. Your intention can be to surrender but that does not mean you are giving up your right to the homestead proceeds when and if the property is sold. One always wants to claim on Schedule C the full homestead unless there is a reason not to.

It sounds like you are a little more comfortable in this process. Keep posting your questions and reading the various threads. Educate yourself. The biggest issue I see on this board is the fear in the posters. The bk process is not something to fear (although we all fear the unknown). The process, for the most part, is here to help and the more you know about it (its ups and downs) the less fear you will have.

Des.

[KevFinnerty]

In response to:

"Although it was not explained to me fully, I think now that if you say "surrendered" in regards to the asset (my house in this case) then the trustee gets to take it without any regards to you getting part (or all) of it in an exemption."

Not quite. Your intention can be to surrender but that does not mean you are giving up your right to the homestead proceeds when and if the property is sold. One always wants to claim on Schedule C the full homestead unless there is a reason not to.

It sounds like you are a little more comfortable in this process. Keep posting your questions and reading the various threads. Educate yourself. The biggest issue I see on this board is the fear in the posters. The bk process is not something to fear (although we all fear the unknown). The process, for the most part, is here to help and the more you know about it (its ups and downs) the less fear you will have.

Des.

Thanks. Fear is definitely a big part of this for me (& everybody). All the freakin' stress to begin with, not being able to pay bills, losing possessions, losing home, being uprooted, all of that - and on top of it this complicated and intimidating process of bankruptcy with its myriad of forms and incomprehensible rules.

As soon as I think I might understand something - I learn something else and think that is the right interpretation - then like a week later it seems like that is wrong (depending on what I read or who I talk to). On 50% of this stuff I don't know who to believe anymore. At this point I don't even know if the cash I declared in my schedule B is even legitimately exempt, something I learned only 20 minutes ago reading a thread up here.

One sure thing is that this is a great forum for learning about all this and I appreciate everyone's advice, right or wrong.