How Can Debtor Be "FORCED" Into a Ch13?

[ryan]

I've just never understood this...

I read posts about a Ch7 BK applicant not qualifying for a 7 due to over median income or having too much disposable cash after bills and being "FORCED" into a Chapter 13 ????

Others say they're worried about being FORCED into a 13? How can any trustee or court do that, if you, the debtor, refuse to accept that ch 13 filing?

...can't you just say, since this filing would cause that, I rescind the filing?

[flyinbroke]

Well, in this sense you are. BK offers protections not available for nonfilers who can't pay their bills. If you want the protection of BK and do not qualify for a 7 you are essentially forced into a 13 or nothing at all.

[justbroke]

You can't be "forced" into a Chapter 13. Only you can "decide" to go into a Chapter 13. If your Chapter 13 case is dismissed, you are offered the option to "convert" to a Chapter 13, rather than have your case dismissed. Please remember that filing a Chapter 7 or Chapter 13 is not a right. You must qualify for a discharge under each Chapter of the Bankruptcy Code.

[Flamingo]

In order to file personal bankruptcy, one must qualify to file and it will be either a Chapter 7 or Chapter 13. There are certain qualifications to be met for each Chapter. If you don't meet the qualifications to file under one specific Chapter, you can file under the other. No one forces anyone to file - when you sign the paperwork to file no one is standing there with a gun pointed at your head. However if one needs to file bankruptcy they need to file and a good attorney will explain why one has to file under one Chapter instead of the other. To try to circumvent that with all sorts of creative stuff could just delay the process by the trustee questioning items and looking for more information.

Filing BK is a huge emotional area and everyone wonders if they did the right thing when they file and always wonder if they could have possibly filed under aniother Chapter. However, if there are assets one wants to protect (i.e., house), a Chapter 13 may be the only option.

[kornellred]

Prior to the 2005 bankruptcy law modifications, it was just too easy for a debtor to say the hell with it - I'm not paying anything back to the creditors. A Chapter 7 discharge absolves the debtor of all responsibility for unpaid debts.

The fact is, most people know the credit train runs out of track - sometimes sooner, and sometimes later Those for whom it runs out later just continue to ride, knowing they can get off at the bankruptcy stop. It's actually fraud, but there is no way for creditors to prove it. Everyone knows it, and always has known it. In order to mitigate against enormous losses, debtors are now required to repay a portion of their debts, if it is at all possible.

Chapter 13 is actually the default for individuals. Chapter 7 is now only for those who can qualify for it.

[flyinbroke]

The default is a "forced" BK in the sense that if you choose to file and don't qualify for a 7, there are no other viable alternatives. However, you can choose not to file at all and wait for the wolves to start blowing at your house.

[MSbklawyer]

True, you can't be forced into a Chapter 13, but there is such thing as an involuntary bankruptcy for chapter 7 and 11. Three or more of your creditors can file a bankruptcy for you -- forcing you into chapter 7 or 11. They are rare, but they are provided for by the code.

[flyinbroke]

True, you can't be forced into a Chapter 13, but there is such thing as an involuntary bankruptcy for chapter 7 and 11. Three or more of your creditors can file a bankruptcy for you -- forcing you into chapter 7 or 11. They are rare, but they are provided for by the code.

Please, b'rer fox, not the briar patch.... Although a forced 7 probably has ramifications I don't know of...

[ryan]

Please, b'rer fox, not the briar patch.... Although a forced 7 probably has ramifications I don't know of...

flyinbroke: I just realized your Signature is from the comedian John Pinette, right?

[flyinbroke]

Yes it is, paraphrased. He gets kicked out of a Chinese joint for "you eat entire buffet".

[Llelxon]

Once you file a chapter 7 though it is on your record even if it is dismissed right? I don't see what the benefit of not doing a 13 if this is the case because once you decide to file you have screwed your credit.

[kornellred]

You cannot file a Chapter 7 pro se if you do not qualify for it - it will be dismissed. BK attorneys will not file a Chapter 7 for you if you definitely do not qualify for it, but there are a lot of gray areas whereby a non-qualified individual might obtain a Chapter 7 discharge - the law is complicated and that is why you need an attorney in the first place.

Debtors do not make the decision to file for Chapter 7.

[flyinbroke]

You cannot file a Chapter 7 pro se if you do not qualify for it - it will be dismissed. BK attorneys will not file a Chapter 7 for you if you definitely do not qualify for it, but there are a lot of gray areas whereby a non-qualified individual might obtain a Chapter 7 discharge - the law is complicated and that is why you need an attorney in the first place.

Debtors do not make the decision to file for Chapter 7.

Yeah, generally if you are over median you need kids and a house. Most of the "acceptable" exemptions on a means test come from those two money pits. If you have neither, it is 13 Land for you baby.

[OhioFiler]

True, you can't be forced into a Chapter 13, but there is such thing as an involuntary bankruptcy for chapter 7 and 11. Three or more of your creditors can file a bankruptcy for you -- forcing you into chapter 7 or 11. They are rare, but they are provided for by the code.

This is being done as we speak to a company in this area. Fair Finance closed its doors in November after the FBI raided its offices. The investors are trying to force a Chapter 7 in hopes of stopping the owners from liquidating.

[BCA2009]

Once you file a chapter 7 though it is on your record even if it is dismissed right? I don't see what the benefit of not doing a 13 if this is the case because once you decide to file you have screwed your credit.

It would depend on whether or not you are willing to be put on a court controlled budget. According to my lawyer the Chap 13 Trustee for my area is Nazi. Had we not qualified for Chap 7, I would have went a different route and tried to settle my debts one at a time. Chap 13 is great for many people, but it depends on your financial situation and your ability to stay with it for 3- 5 years.