Converted from a Chapter 13 to a Chapter 7 and having problems with the US Trustee

[nicki52731]

I recently converted from a Chapter 13 to a Chapter 7 and the US Trustee states I did not pass the Means Test. I printed off the Means Test that my attorney's office submitted from the Pacer site. There are several inaccuracies that I can see. The first, being the national standards. It appears the Paralegal used rates from 2009 instead of 2012. Aside from that under deductions for debt payment, it appears she took my house payment x 6 months and divided it by 60. The way I'm reading this item, that is not correct. I read it as you take the payments for the next 60 months and divide them by 60. For example if your payment is $830, you multiply by 60 and then divide by 60. Am I reading this item wrong? Any information would be appreciated.

[justbroke]

For your house payment, there usually is no math. It is what is contractually due over the next 60 months, so that's usually 60 times X... so you don't need to do any math... you just put X. However, if your amount changes (due to an Interest Only period or other), you can actually calculate the change and then find the average. This amount is listed on Line 42 of the Means Test (Schedule B22A).

If you are in arrears, then you take the total amount of arrears and divide by 60. You also enter that on the means test, just below where you put your "contractually" due obligations. This would appear on Line 43 of the Means Test. If you're saying they took $830 x 6 and then divided by 60 and put that amount on Line 43, and you are 6 months behind in your mortgage payments, then that's to bring your mortgage current.

Additionally, your District may require you to use values from when you filed the Chapter 13. So, if you filed in 2009-2010, you may have to use those numbers from the 2009 BAPCPA expenses. So the question is, when did you file your Chapter 7? If you are in one of those Districts where the original values are used, then your attorney/staff may be correct. I don't know what the rules are in your District.

As for which standards, the Trustee typically uses their OWN spreadsheet that has the current standards. You could try doing the Means Test yourself (B22A) and see what your results are.

Simply ask to speak with your attorney or his/her assistant and see how the process works. If they truly have mathematical errors, then you should get those correct (especially the errors on the mortgage payment).

[nicki52731]

I did file in 2009. I didn't realize that I may have to use those numbers. As for the mortgage payments those are definately wrong based on what you have told me. That's the way I read it, however I wasn't sure if I didn't make a mistake. I did do a means test online and passed, however it is based on 2012 national standards. I do know that they are using 2012 income guidelines but I'm not sure about the national standards. The cure amounts are also wrong on the means test on the Pacer site. Thank You.

[justbroke]

Well, this means that it's time to setup an appointment with the attorney and go over things to see where you are. If there are mistakes, then they need to be corrected.

[nicki52731]

Would you happen to know what will happen if I don't quality for the Chapter 7. Will I be allowed to go back to the 13?

[justbroke]

You could re-convert, but it may be better to dismiss and re-file. It is a strategy question and without dismissing first, you might run into "good faith" issues; but that's just speculation.

I was actually looking at going back into a Chapter 13 if my Chapter 7 conversion was dismissed.

[happy_ira]

I'll add my $0.02 as I went through something similar on several issues a few years ago. I have not posted here in a while, but I promised that if issues I could help with arose, then I would come back. This board/forum was a LIFESAVER back then for me.

Lesseee... a few general comments. At my 341, in NYC, a rep of the US Trustee was present. He was actually there for all the cases being heard, but he didnt really say anything until mine came up. I guess no one was as special as me.

Anyway, first, my attorney/paralegal was like yours.... wrong. They entered incorrect info, weren't focused on my case, etc. I think that is true for many people (but not all). Therefore, YOU must stay on top of your case like a hawk. Put it this way: if you come out victorious it is equivalent to someone paying you THOUSANDS of dollars since it'll be wiped out in the Ch 7. My attorney filed parts of the form incorrectly, so it had to be re-filed (as Ch 7) as few days later. It felt like a HUGE deal, but in reality I think that sort of thing happens often enough. The big bad bear isnt going to penalize you just because you had to re-file. But the point is, you need to be filling out these forms and be prepared to do a lot of legwork.

My income was WAY over the median (and I live in NYC to begin with where there is some latitude already), but the 341 trustee at 341 saw there wasnt much to talk about. Yeah, he saw the income was high, but everything else jived because it was cleanly laid out (by me).

Therefore, the 341 trustee (I forget his proper 'title') was done in a few minutes.... note that he DID ask me questions like "You have high income. Dont you and your wife go on vacations? What do you do for anniversaries?" You have to be willing to suck it up to a) answer truthfully and b) do a little acting to layer on the drama. I recall my answer "We dont do much now. We just cant afford it. We simply exchange cards. <sniffle>" Shed the tears--it'll be worth it. Now, again, I am not suggesting you LIE ever, but these people all have a human side so you might as well show yours.

Now, the US Trustee (or rather, the rep present) on the other hand was practically inhuman. He simply didnt believe me. Even when the 341 Trustee said "I can;t find anythign here, I am done..." The UST piped up. GGRRRR! He started asking for X Y and Z and inquiring about things.

Note that my attorney wasnt even present at the 341. Instead, he hired some lawyer-for-hire for $10/hour whom I had never met before. Now, that isnt always the case and many attorneys actually show up - but goes to show you, again, to be prepared. YOU are the one who should be answering (and pleading) to the trustee.

(By the way, feel free to do a search on my name here for more history.)

So, long story short, everything moved to the UST's office. There was some back-and-forth and it looked iffy. But what convinced the UST was a carefully crafted (and heartwarming ) letter that I wrote and sent via Priority Mail pleading my case. I am sure that very, very, very few such letters land on the USTs desk. Usually, according to my attorney whom I did not check with before sending the letter, it;s just a bunch of legalese the UST deals with day-in, day-out. So, reading a REAL letter is a break from the action. (Yes, I happen to be a writer - so that helped. I can help you write a letter as well if you PM me perhaps...)

Anyway, hang in there, read up on this forum--there are some VERY knowledgeable people here , stay active on your issues as everyones BK is unique in some way. Check PACER, etc.

PM me if I can help further.

Good Luck.

Ira.

[rjl0206]

Awesome read, thanks Ira!

[justbroke]

I just want to add that the Chapter 7 Panel Trustee (or Chapter 13 Standing Trustee) have totally different jobs than the United States Trustee (UST). The UST's job is to actually question things and insure the integrity of the entire program, regardless of the panel or standing Trustees.

If you are over the median income in a Chapter 7, you should more than expect the Office of the UST (OUST) to not only be present during a 341 Meeting, but to make inquiries before, during or after that meeting. If you have that expectation, then you will realize that this is their job to question and not just take what's on paper for granted.

Remember, the Chapter 7 Panel Trustee is looking for assets. The UST is looking for reasons why you shouldn't be granted a discharge. Unfortunately, policing the Bankruptcy system, when most people are hurting, still needs to be done and will appear to be inhuman to those hurting the most. I don't even know if you can do that job -- the OUST's job -- compassionately. It's all numbers to them which is impersonal by design.

[happy_ira]

If you are over the median income in a Chapter 7, you should more than expect the Office of the UST (OUST) to not only be present during a 341 Meeting, but to make inquiries before, during or after that meeting. If you have that expectation, then you will realize that this is their job to question and not just take what's on paper for granted.

Remember, the Chapter 7 Panel Trustee is looking for assets. The UST is looking for reasons why you shouldn't be granted a discharge. Unfortunately, policing the Bankruptcy system, when most people are hurting, still needs to be done and will appear to be inhuman to those hurting the most. I don't even know if you can do that job -- the OUST's job -- compassionately. It's all numbers to them which is impersonal by design.

Great points. Well said.

I know your taglien says you are not an attorney, but you should consider going to law school!

[Fresh]

I think this is an excellent summary of the respective roles. I have to say that I was over median and I feared that random audit by the UST. Never happened. The only person representing the UST the day of my 341 was a paralegal who was pretty nasty, but not to the people who had filed. He simply scared the stuff out of the attorneys who were there to represent and help their clients. My attorney feared that I would be afraid, so he calmly told me about who the man was and what he looked like, and should he ask any questions just to answer honestly. My attorney was representing several people that day, we were all over median and he asked us NADA.