Conversion to a Chapter 13

[stevem3827]

Our initial 341 meeting was continued until March 4th as the UST had sent a letter referencing possible abuse. This stemmed from some information on the Means test being incorrect and also requesting answers to questions regarding our children, college and other non-dollar related questions.

It appears that the Means test and Schedule I are finally correct and these will be filed with the court soon. Our DMI is on the plus side as we are also over the state median. It does appear that there is enough DMI to fund a Chapter 13. So my question is, what is the process at this point if the UST wants a 13? Does the whole process start over or is the paperwork just amended to that for a Chapter 13 and the clock continues to click from the original 341 meeting date of January 28th? Also, if we are converted to the Chapter 13, will our tax refund come into play at all? I this point we have not filed our taxes but are expecting a sizeable refund.

[justbroke]

If you convert, it is from the date you originally filed. You would get a new 341 Meeting in front of the Chapter 13 Standing Trustee (or their assistant/stand in). You would re-do your Means Test, since the Chapter 13 Form B22 is slightly different (and is called Form B22C -- the Chapter 7 Means Test form is B22A).

The clock is from when you filed. Your return may or may not be property of the Estate. Your attorney may be able to exempt just "this year's" refund. You need to address that with your attorney.

[stevem3827]

Thanks for the info.

Here's a new thought though. As part of our income, I have a second job. On the average, I probably net about $330 a month if averaged over a 12 month period as I earn less during the period of April-August. Annually, I gross around $5500. If the Chapter 13 repayment plan works out to about $440 per month, what would happen if I said I was no longer going to work a 2nd job? That would cut down the DMI to around $110 per month.

Can the Trustee force me to work two jobs since I have in the past? How can this be presented as a change in future income before any type of plan is confirmed?

[LadyInTheRed]

stevenm3827, I don't think a trustee can force you to work a second job. Talk to your attorney about this. It would have been a good conversation to have before filing BK. A dismissal of the 7 may make more sense than a conversion.

Assets are not typically liquidated in a Chap 13 like the are in a Chap 7. In a Chap 13, you can keep that tax refund that was an asset as of the date of filing as long as your plan pays to your unsecured creditors at least an amount equal to the non-exempt portion of the refund. Any refund from wages earned after filing is income that may have to be turned over to the trustee. It depends on your plan and local practices.

[stevem3827]

At the time we filed, quitting was not an option. However wife started new job at higher salary. If, on paper, all of my P/T income is going to pay for the Ch 13 payment, thinking it's just not worth working to pay into the plan.

[AngelinaCat]

stevenm3827, I don't think a trustee can force you to work a second job. Talk to your attorney about this. It would have been a good conversation to have before filing BK.

That IS a good question to as your attorney. In our Asset Ch7, we had to pay the trustee $450.00 a month for twelve months to purchase our non-exempt stuff back from the BK estate, and the trustee expressly noted that he expected that the funding for this $450.00 a month would come when "Mrs. Cat secures FT employment." I had lost my FT job a couple of months before we filed--one of the main reasons we filed a Ch7 instead of the CH13 we were trying for. We were discharged in August 2008.

FT employment for me has yet to happen. I was then 56 years old. Now, I am 60. I have been passed over now for five good FT jobs, in favor of younger people. Even though I state in my cover letters that I am willing to work at a beginning level of pay, and plan to work at least ten years, I never have been granted the courtesy of an interview.

For the record, we were able to make those payments, partly out of my Unemployment Compensation checks.

[keepsmiling]

That IS a good question to as your attorney. In our Asset Ch7, we had to pay the trustee $450.00 a month for twelve months to purchase our non-exempt stuff back from the BK estate, and the trustee expressly noted that he expected that the funding for this $450.00 a month would come when "Mrs. Cat secures FT employment." I had lost my FT job a couple of months before we filed--one of the main reasons we filed a Ch7 instead of the CH13 we were trying for. We were discharged in August 2008.

FT employment for me has yet to happen. I was then 56 years old. Now, I am 60. I have been passed over now for five good FT jobs, in favor of younger people. Even though I state in my cover letters that I am willing to work at a beginning level of pay, and plan to work at least ten years, I never have been granted the courtesy of an interview.

For the record, we were able to make those payments, partly out of my Unemployment Compensation checks.

Your tt was quite a guy. UGH.
Would have loved to see you apply for a job with HIM :P
I guess he missed all the articles about how we over 50's are the new " unemployables."
My dh has been applying for years as well, btw.

[stevem3827]

Spoke to my attorney. He "advised" that the reason for terminating p/t employment would have to be convincing enough so as to not just be to avoid paying into the plan or qualifying for Chapter 7.

I drafted a letter that my employer agreed to sign simply stating that I had tendered my resignation with an effective date of March 23rd which coincides with an annual slow down of the business and that the reason for terminating employment was that being part-time, the hours that I worked were after my regular full-time job and often included late night hours. These late hours were effecting my health in a negative way, specifically not enough sleep which effects my performance at my regular job. The attorney feels this is a reasonable explanation.

The boss at the p/t job agreed to sign it as long as no possibility of push back down the road. I look at it as when the time rolls down, I can either change my mind and continue to work there or say that they convinced me to stay. A change of heart. People often withdraw a letter of resignation if circumstances change. As long as we aren't dismissed or the 60 day period doesn't change, this puts us at around March 29th so I can schedule myself off for a few of the days until that date, if this works out. Eventually, I hope to not work the 2nd job. Just not exactly sure when that will be as I've been doing it now for 15+ years but with 2 in college, may not be a realistic option looking forward.

So, our next 341 is on Monday. Hopefully this time the UST will show up as he didn't the last time. It would be nice to get this resolved or at least pointing in one direction. Since we initially contacted the attorney back in September and the paralegal wasn't exactly on top of things, we didn't file until December then had the continued 341 in January with very little happening all along other than the UST wanting additional info and the paperwork amended and corrected.

[justbroke]

What your attorney eluded to was what we call "bad faith". A Chapter 13 plan needs to be submitted in good faith. So long as your plan is in good faith and not trying to circumvent the system, I don't see any issues with the Chapter 13 Standing Trustee.

[Quiznos1]

How much did your attorney charge you to convert? We had a free consult with an attorney today and she said if we had to convert to a 13 after she had finished the paperwork for a chp7 she would charge us the full chp13 fee on top of the chp7. She, also said that if a chp7 is dismissed and you refile for 13 it shows up as two BKs on your credit report.

Quiznos

[stevem3827]

At this point we have not converted.

Had our continued 341 this morning. Assistant for the US Trustee was there, asked some questions, mostly regarding the usage of the vehicles, how much of the monthly transportation cost was associated to our kids, 401K loans, wife's job status, other misc questions that were already answered in the response filed to the UST back in January.

The asked for a copy of our auto insurance declaration, which I had for 2012 but comes due again this month for 2013. Not sure if it will go up or not. She also asked for our 2012 W-2's even though they had pay stubs for the final pay of 2012 showing all the year to date info. When I asked if she wanted our children's W-2's (they made less than a $1000 each last year) my attorney intervened and said if this was brought into the mix, then all of their expenses apart from the the standards would be brought was well (i.e. college costs). She backed off of that then.

She also stated that there was still a discrepancy in one entry on the Means Test and wanted it within 5 days. The attorney would not promise it within that period of time and when the UST said that they only had 10 days to decided if there is a presumption of abuse, our attorney immediately said we would challenge it. The local trustee wanted to conclude the 341 when she mentioned about continuing it (as the 10 day clock would start) and again the attorney said he wanted it concluded as bringing us back for another continued 341 is an economic hardship (taking off work). As of now the local trustee was leaning towards concluding it.

The UST also asked for the reason why I was terminating the 2nd job. She didn't go into too much details about it but it would make a $300+ a month difference on the Means Test if you looked forward. that would be very close to not having enough to fund a Chapter 13. Still borderline at this point.

Wife was very nervous about the questions about her job as she recently changed employment but answered based on the date of filing and status as of the original 341, which was 5 weeks ago. Had the UST showed up for the original meeting, she hadn't even accepted the new job at that point and most of the questions that were asked today would have been answered back then, with the exception of the corrections to the Means Test and Schedules I & J.

After the meeting, the attorney was very straight forward in saying that the UST can be abusive in their power and bullies. He wasn't backing down.

[alo]

I like your attorney!! I hope it all works out for you.

[stevem3827]

Thanks.

Checked pacer, Trustee filed "Chapter 7 Trustee's Report of No Distribution - no funds collected" this morning. Guess I have to wait now and see what the UST does during the next 10 days.

[LadyInTheRed]

She also asked for our 2012 W-2's even though they had pay stubs for the final pay of 2012 showing all the year to date info. When I asked if she wanted our children's W-2's (they made less than a $1000 each last year) my attorney intervened and said if this was brought into the mix, then all of their expenses apart from the the standards would be brought was well (i.e. college costs). She backed off of that then.

To everybody who has yet to attend a 341: If the trustee asks you for information, agree to provide what they ask for, but don't volunteer to provide additional information, no matter how harmless you believe it is. If you have questions about what to provide, ask your attorney later. Also, never answer any question other than what is asked. This is good practice any time you are being questioned in any legal proceeding. Sometimes what seems harmless can be used against you later.

[stevem3827]

Well, I guess as soon as the local Trustee filed his report it was inevitable that the UST was going to file a Presumption of Abuse, which occurred late yesterday.

Now it's going to be up to my attorney to argue that with me leaving my p/t job looking forward, it will leave around $100 per month, which if the Means Test is redone, is now no presumption of abuse. I hope that they buy it.

While I agree, in part, with LITR comment above I personally feel that it would depend on what is asked/requested. Each time they come back and ask for more information or documents, it extends out the process. Like many, I just want this behind us. I am sitting on filing our tax return plus financially, our situation is changing. For example, the UST asked if either of us are expecting a bonus from work. As of yesterday, it was accurate to answer no. In reality, it was right around this time last year our company declared our bonus, but as of the moment it has not been done and may not be until it is formally annouced. However, once that occurs, if asked again, then I must disclose it. In addition, my wife just started her new job. A new look back period would have to include her new salary, which we want to avoid if possible.

So, in our circumstance I would rather provide documents as quickly as possible to curtail further delays. Had the UST showed up at our 1/28 meeting and had the paralegal responded to their original requests sooner and again, had the UST requested the additional info/questions that they asked yesterday prior to the continued meeting so that they either would have had them in hand or knowledge of, the process would be further along. The first case yesterday was another continued 341 and the UST dismissed them from the meeting immediately as they had no addtional questions (they could have told them ahead of time too to give them the courtesy of not having to be there yesterday for no reason).