Just about to file Chapter 7 and received inheritance...

[Dan76]

So, I was just about to file Chapter 7. I had all of the paperwork filled out and signed them and my grandmother passed away. Now, it has become a little more complicated, because I was left a couple of things in the will. My attorney advised me to not submit the petition until I learn more about the inheritance.

Briefly let me tell you about the situation.

I have about 30-35k in debts. I have a default judgement against me for a lawsuit for which I am expecting a letter threatening wage garnishment anytime now, and their is property and money which I inherited. It's not a lot, but it makes my case more complicated.

What I was left was about $2000-2500 in a fund and 1/4 of a house with a reverse mortgage on it still. My attorney says that I am exempt for $12,000 in my case.

My question is, I don't no if I should now try and settle with my creditors or proceed with the BK. I know that it could be years before the property is sold, and I'm not exactly sure if any equity is left in the house for which I am only receiving 1/4 of.

The thing I wanted to know is this. I already asked my attorney this and just wanted to make sure. Am I allowed to try and settle with my creditors if they are willing to work with me and make payments, but still have the option to file? I'm mainly concerned about the pending wage garnishment, and want to try and hold them off by offering them money.

From what I understand if I file now I get to keep up to 12k because of the exemption, but let's say I owe 30k and the house has 50k. From what I have been told, the trustee will take ownership of my portion of the house and use that money once it is sold to pay my creditors. If my share is 50k will I still get 20k after the creditors have been paid?

Also, if if the house does have 50k in equity, it might make more sense to settle, then file BK, but I might have to hold off my creditors for a long time if the house does not sell right away.

The last time I spoke to my attorney's assistant, she basically said I should wait until house is appraised and hope for minimum equity. She said that's my best case scenario.

If I can I want to settle with my creditors, but I'm only going to be able to do it if they are willing to maybe go down to 25% of the balance and I would also need to do it on a payment plan for I do not have the money to pay it all up front. I would think they would rather have something then nothing if I go BK 7.

The main thing I am worried about is the default judgement and pending wage garnishment or bank account freeze that may be coming soon in a couple of months. If that happens, I may have no choice but to file BK 7 and take a loss on the equity in the home if there is any.

I would really appreciate any insight or advice anyone might have about this situation.

Thank you,
Dan

[LadyInTheRed]

You are very unlikely to get a settlement without paying a lump sum. But, the creditor may agree to a payment plan on the full amount of the judgment instead of proceeding with garnishment. Do you know the maximum that they can garnish in your state? It may not be so bad if the garnishment starts before you file BK.

If the house is sold and the BK estate's share of the proceeds exceeds your unsecured debt, you will receive the excess after payment of the trustee's fee.

I'd contact the executor of your grandmother's estate or the executor's attorney and ask how soon they plan to get an appraisal of the real estate. It really shouldn't take that long and they may be willing to expedite it if you explain the situation.

[Dan76]

You are very unlikely to get a settlement without paying a lump sum. But, the creditor may agree to a payment plan on the full amount of the judgment instead of proceeding with garnishment. Do you know the maximum that they can garnish in your state? It may not be so bad if the garnishment starts before you file BK.

If the house is sold and the BK estate's share of the proceeds exceeds your unsecured debt, you will receive the excess after payment of the trustee's fee.

I'd contact the executor of your grandmother's estate or the executor's attorney and ask how soon they plan to get an appraisal of the real estate. It really shouldn't take that long and they may be willing to expedite it if you explain the situation.

I think the maximum in my state is 10%, but I wanted to avoid my employer from having to find out about it. From what I understand, if I file now and the house is not sold, my case is basically going to be open until the house is sold, and that's when I would get my discharge. Is that correct?

I was going to ask the probate attorney, but my mother is being really difficult about the whole situation and is impossible to talk to about it. I'm trying just to not involve anyone and just keep it between me and my BK attorney. My mother seems to think he will not talk to me about my situation and his job is just to probate the will. I'm probably going to go anyway and ask.

[LadyInTheRed]

I think the maximum in my state is 10%, but I wanted to avoid my employer from having to find out about it. From what I understand, if I file now and the house is not sold, my case is basically going to be open until the house is sold, and that's when I would get my discharge. Is that correct?

No. Discharge and closing are two separate events. The closing of your case would be delayed. But, your discharge would not, assuming there is no dispute regarding the dischargeability of your debts.

I was going to ask the probate attorney, but my mother is being really difficult about the whole situation and is impossible to talk to about it. I'm trying just to not involve anyone and just keep it between me and my BK attorney. My mother seems to think he will not talk to me about my situation and his job is just to probate the will. I'm probably going to go anyway and ask.

Sounds like your mother is very emotional, which is to be expected. That's one reashon she has an attorney. The attorney may not talk to you, especially if your mother has asked him not to. But, it can't hurt to call and ask. I'm a probate paralegal and we answer these kinds of questions all the time even though we aren't required to. Things go more smoothly when the beneficiaries are kept informed on the status of the probate administration. But, if our client asked us not to talk to beneficiaries, we would honor that request. Keep in mind that your mother's attorney will probably tell your mother anything you tell him. He has no duty of confidentiality to you. The probate court probably has a deadline within which an inventory of assets, including values, has to be filed. You might want to find out what that deadline is.

[Dan76]

No. Discharge and closing are two separate events. The closing of your case would be delayed. But, your discharge would not, assuming there is no dispute regarding the dischargeability of your debts.

Sounds like your mother is very emotional, which is to be expected. That's one reashon she has an attorney. The attorney may not talk to you, especially if your mother has asked him not to. But, it can't hurt to call and ask. I'm a probate paralegal and we answer these kinds of questions all the time even though we aren't required to. Things go more smoothly when the beneficiaries are kept informed on the status of the probate administration. But, if our client asked us not to talk to beneficiaries, we would honor that request. Keep in mind that your mother's attorney will probably tell your mother anything you tell him. He has no duty of confidentiality to you. The probate court probably has a deadline within which an inventory of assets, including values, has to be filed. You might want to find out what that deadline is.

LOL, yes very emotional! She's not the executor of the will, my Uncle is. She told me she is going there with my Uncle to open the will and than my Uncle's job is to distribute the assets to the beneficiaries. It's pretty straightforward, not a lot is involved. The house was left to my mom, uncle, sister and me. Their are no other assets except for a couple of accounts, one of which was left to me and should be exempt according to my lawyer.

I guess my question is with regards to my BK is the probate lawyer will probably not give me advice on my situation regarding what was left to me and my BK case. I should probably just be dealing directly with my BK attorney for that right? I'm going to go to the opening of the will anyway to make sure that I am informed about what is going on and who should expect to receive what assets.

[LadyInTheRed]

I guess my question is with regards to my BK is the probate lawyer will probably not give me advice on my situation regarding what was left to me and my BK case. I should probably just be dealing directly with my BK attorney for that right?

Right. The probate attorney would only be able to help by telling you how long it will take before they get an appraisal of the home.

[tobee43]

LITR will correct me if i am wrong.

there is another possibility here. that is, when a property is jointly held, the others holding shares of that property will have an opportunity with most trustees to buy the portion of your share. that way they are not forced to sell the house. additionally, if the trustee got to point that he/she sells the property, a distribution must first be done to the other owners off the top of the proceeds. in other words if the house sold for 200k and you owned 1/4, the 150k must go to the other owners first before the trustee can take your share.

your situation is a bit different since the property is still be held in probate and i don't know, and i'm certain LITR has seen some of these situations take YEARS to finally release the assets. (let's not hope that is the case in your situation). just something to be mindful about.

your mother and uncles attys will most likely advise them, to avoid this situation BEFORE you get in front of the trustee, they purchase your share. but the question remains share of what? when the assets are still tied up in probate.

if you go that route, i would then wait a while before you file for the dust to settle before your actually filing if possible. of course run this all by your atty first. i have seen this situation work out and the trustee was informed of the quit claim deed exchange, but usually for the small amounts involved here they chose not want to get involved in the situation since it is so complex. NOT to say that will not happen to you, as these trustees are getting more greedy as time is going on, it's like they are preparing themselves for the influx of all the bankruptcies to slow down, thereby halting their ability to make themselves more money. sad as that may seem!

[Miknan]

When it comes to joint property, I have 25% interest in 40 acres of vacant scrub land. My lawyer said the trustee can: 1) leave it alone 2) make me an offer to keep it. 3) offer my siblings to buy me out. 4) auction the whole thing. He said there is no telling what she is going to do. I was discharged 11-21-11 and still have no idea what the hell is going on.

[tobee43]

When it comes to joint property, I have 25% interest in 40 acres of vacant scrub land. My lawyer said the trustee can: 1) leave it alone 2) make me an offer to keep it. 3) offer my siblings to buy me out. 4) auction the whole thing. He said there is no telling what she is going to do. I was discharged 11-21-11 and still have no idea what the hell is going on.

did your atty tell you that if they do decide to auction it off that your siblings must get paid off the top?

[Dan76]

LITR will correct me if i am wrong.

there is another possibility here. that is, when a property is jointly held, the others holding shares of that property will have an opportunity with most trustees to buy the portion of your share. that way they are not forced to sell the house. additionally, if the trustee got to point that he/she sells the property, a distribution must first be done to the other owners off the top of the proceeds. in other words if the house sold for 200k and you owned 1/4, the 150k must go to the other owners first before the trustee can take your share.

your situation is a bit different since the property is still be held in probate and i don't know, and i'm certain LITR has seen some of these situations take YEARS to finally release the assets. (let's not hope that is the case in your situation). just something to be mindful about.

your mother and uncles attys will most likely advise them, to avoid this situation BEFORE you get in front of the trustee, they purchase your share. but the question remains share of what? when the assets are still tied up in probate.

if you go that route, i would then wait a while before you file for the dust to settle before your actually filing if possible. of course run this all by your atty first. i have seen this situation work out and the trustee was informed of the quit claim deed exchange, but usually for the small amounts involved here they chose not want to get involved in the situation since it is so complex. NOT to say that will not happen to you, as these trustees are getting more greedy as time is going on, it's like they are preparing themselves for the influx of all the bankruptcies to slow down, thereby halting their ability to make themselves more money. sad as that may seem!

My BK attorney told me that if I signed over my share to anyone, it would be considered fraud before or after I filed. So, by them purchasing my share, is that considered fraud also?

The probate attorney thinks I should not file and settle, because my share will probably be around 50K and my debts are around 30-35K.

I received a court notice, but I never responded to it a few months ago. I'm assuming by now I have a default judgement against me and wage garnishment or bank account freeze is the next step. My BK attorney said it will still be a couple of months before that happens.

The probate lawyer told me I can hold off the garnishment by going to the court and filling out papers saying that I missed my court date for whatever reason and they will schedule another one.

Is this true, and what is the best way for me to hold off creditors against suing me until I get the proceeds from the sale of the house?