chapter 7/13 second opinion

[austinpowers]

I am trying to file bankruptcy. the means test says my wife and myself make too much to file ch 7 in indiana. but our budget says we have nothing or very little left to repay in a chapter 13. my attorney, through where i work says i need to try to get into ch 13 and pay some back because of the amount i am writing off and the amount of my current mortages. even thought i am giving up my car and returning a leased vehicle and am current on my first and 2nd mortgage, he thinks the trustee will make us move to a lesser house. the house is not extravigant just borrowed to much on it and unfavorable terms on the second. can they do that? thanks!

[keepmine]

I'd see another lawyer or 2.
If there is no equity available to support the 2nd mortgage, that lein may be stripped in a Chapter 13. That would be the only advantage to filing a 13 IMO.

[austinpowers]

Thanks for reply, i looked into that, the house appraisal is more than the first, so cannot strip 2nd

[FreshLikeADaisy]

Austin, Keepmine is right on the attorney thing -- definitely worth your while to see a couple more. I'm no expert, but the whole "trustee will make you move" thing is very questionable to me. Also, the means test is only ONE part of whether you can file Ch7 -- many people here have been over the means, but successfully discharged their debts via Ch7 because their expenses were legitimately high enough to justify the Ch7. The more common problem is that the attorney recommends a 13 above all other solutions because a 13 is easier and more lucrative for *him*. Caveat emptor, and go see a few more attorneys. Good luck!!!

[woeisme]

I've never heard of a trustee making someone move to a different house. Now if you had a ton of equity in it, you might not be able to exempt it all and need a 13 to protect the equity, but that doesn't sound to be the case here. I know there are also allowed amount of housing expenses based on the IRS tables, but if you can prove your actual expenses are higher, and not living an luxury lifestyle in some million dollar estate, I think you should still be able to do a 7. There are cases of people over the median income filing CH 7, I know because I've read several posts by them in the CH 7 section. You need to talk to other attorneys, hopefully one who does a lot of 7's as well as 13s. Good luck.

[tay666]

What the attourny may be talking about, is that the house may be too much of an encumberance to them.
If the payment is too high, and there is no realistic way they can continue to make the payments, then trustees have been known to not approve the plans.

[austinpowers]

thanks, there is no equity, with markets falling i am probably upside down, but i don,t have a problem with that it will come back some day. I am making the payments on the house not even 10 days late on any. the attorney is a free service provided through my employer. but he still falls back on the trustee saying we could live in a cheaper house and pay my creditors, don't know how i could since my credit that was great now is destroyed, wife went on long term disability, thats how we got here. thanks for any opinions

[FreshLikeADaisy]

Good luck, Austin. You know, many bk attorneys offer free consultations; you're not stuck with using the employee legal plan guy. Also, before you absolutely decide that you are ineligible for a 7 (or even a 13) it would be worth your time to investigate the numbers further, maybe even download and complete the means test (Form 22) and Schedules I & J (Form 6) from uscourts.gov. These are the actual forms your atty would complete and file for you, and you can look them over yourself.

Tay, good point, but in a Chapter 7, you either reaffirm (keep the house and pay the loan as is) or don't reaffirm (surrender the home and walk away). While a judge CAN kick out your reaffirmation in a Ch7, if you have an attorney it is generally assumed by the court that you have already been counseled with regard to your options and so the reaff is automatically accepted, with very few exceptions. So again, why should an atty steer Austin toward a 13 that won't work, as though there are no other options?

With regard to the trustee conceivably instructing Austin to live in a cheaper house, again, I just find that very questionable. It's not like the trustee is going to hand down the edict "Apply for more credit!" (as in new mortgage) in the middle of a bankruptcy, as though getting refinancing or a new mortgage were even possible within bk outside of the most extraordinary efforts and circumstances.

This is another reason why I think Austin would be well served by going to at least a couple more attys, because it sounds like the guy he spoke with is "13 or nothing" and doesn't even have good info for him on a 13. Anyway, good luck!!!