Non-Consumer BK7 Discharged

[nohoneymoney]

Well it happened, DISCHARGED!!. Since we were a no-asset case, the discharge abandons all property, lifts the stay, and the trustee is done with us!!! It is as good as closed. (Being the paranoid that I am, I will continue to check PACER every week of so until it is closed.)

The combination of the great insight and advice from this site and a really good attorney made this all possible. We got the best possible outcome given the hole we had dug with our rental properties. Our sincere thanks to everyone.

For our background see:http://www.bkforum.com/showthread.ph...-The-Beginning

For our 341 experience see:

http://www.bkforum.com/showthread.php?74107-Our-341-Meeting

Now to really focus on the banks to either modify our liens on our rental properties or take them back.

[AngelinaCatHub]

It's Victory Dance time!

And now our famous Forum Victory Dance by our World famous hamsters:

Here's for ya;

http://www.youtube.com/watch?v=f9aA_fba_To

[tobee43]

Congrats!!!!!!!!!!!!!!

[mountanddo]

Congratulations!

[davetedge]

That's awesome! I'm in the early stages of a non-consumer 7. You're an inspiration.

[jst4f]

Congratulations

[buzzstpoint]

Wohoo!!!!
Gratz...

[justbroke]

A non-consumer Chapter 7 discharge is a special thing in my book! Congratulations on your perseverance!

[nohoneymoney]

And now our famous Forum Victory Dance by our World famous hamsters:

Here's for ya;

http://www.youtube.com/watch?v=f9aA_fba_To

Those little guys have never sounded so good. Thanks

[nohoneymoney]

That's awesome! I'm in the early stages of a non-consumer 7. You're an inspiration.

Thank you and best of luck. We were a little over a year from realization the BK was where we headed to final discharge. Hang in there!

[Drazil65]

Congrats that is awesome!

[ThinkingBK13]

Hi,

We too just filed a non consumer bk7 last week. We also own multiple rental properties all under water as well as 4 different LLCs. Did the trustee take the rents from your rentals during the BK process? Also, what are you going to do with your rentals? Have you considered doing a BK11 now to cram down the 2nds on all the rentals and your primary to make them profitable on rents monthly as well as making them not under water? Im guessing with all your rentals, you would not be able to do a bk13 bc of the secured limits. Thats where we find ourselves. Our attorney is suggesting doing a bk11 right after the bk7 discharge in order to make the IRS accept payments on the IRS debts we owe as well as to strip down the 2nds on the rentals.

Thanks,

[sunshinepa]

Congrats, wonderful to see another happy ending!!!!!

[nohoneymoney]

Congratulations on your filing. Best business decision we have made regarding our real estate investments.

Did the trustee take the rents from your rentals during the BK process? Also, what are you going to do with your rentals?

No. The trustee never mentioned it and we did not bring it up. Per our attorney, we collected the rent, paid rental property related expenses, and sent the remaining money to the bank. Leading up to and during the BK7 process, none of the rental properties had positive cash flow. We did not spend any of the rental income on us. It is not 100% clear to us when the trustee can or cannot take the rents but we believe they can only do it if they intend to take the property to liquidate it. Others on this forum have stated that they can take it at any time and it is true that a trustee has significant latitude. The only court case I saw on this website involved a property that was not exempt and the trustee was planning on taking it. None of this came up in our case. You are in a different state and a different trustee and your results may vary.

Once discharged, we changed our strategy to only paying the mortgage on those properties at or very near positive cash flow while we have a professional attempt to negotiate a lien modification. Currently we are not paying four mortgages and have been late on the other rental properties. If the mortgage modifications doesn't result in positive cash flow, the bank can have them.

On a similar thought, so far only one bank has asked for the rent, which is per the mortgage. We politely told them the tenants name and address, the HOA name and address and told them to go collect the rent and notify the HOA, per CC&Rs, they are taking over the property. We also suggested that they put their own locks on the property. We are not a collection agency for the bank. That was months ago and we are still collecting and keeping the rent.

Have you considered doing a BK11

All of our rental properties are underwater which means the LLCs have no assets making a Chapter 11 filing not necessary so we are dissolving some of our LLC's starting with the ones with CC in the LLC name. As you know, the BK7 removes your personal pre-BK debt liability and with no assets the LLC is judgement proof. So far we have had no trouble closing any of the LLCs but we are in process of closing one in FL and that may be problematic simply because it is FL.

you would not be able to do a bk13 bc of the secured limits

You are correct, the rental properties with second mortgages are not sufficiently underwater to be able to be crammed down. In those cases we will attempt to modify their liens or pay them off for cents-on-the-dollar after the first lien is modified. This only applies to a few of our rental properties.

to make the IRS accept payments on the IRS debts we owe as well as to strip down the 2nds on the rentals

Our accountant's preliminary assessment is that we will not owe substantial money to the IRS as a result of the BK7 combined with foreclosures and/or short sales. Using BK11 to re-organize our debt seems to us to be a long and expensive process with an uncertain outcome since you are dealing with a trustee. Like BK7, the trustee runs your LLC during BK11 and we would rather not go through that again. We have hired a professional through the BK lawyer's office to obtain mortgage modifications. If that does not return the properties to profitability, the property is gone.

Hope this helps.

[ThinkingBK13]

Thanks so much for the detailed response. I wish you the best of luck with the mods. WE too are going to try to go the route of modifying our rentals after we obtain our discharge. BK 11 would be our last resort choice but are hoping the mods will come through. Before we even filed, we had one of the 2nds (GMAC) on a 4-plex send over an offer to release the lien and the loan for a payment of $11k....the loan balance is $140k so that is a great offer. I may take that up after the BK goes through. Now we are just awaiting the 341 meeting in March. Our main goal is to keep 3 of the LLC's since we derive our income off of the businesses....we just hope the trustee agrees they are not worth anything since our debts on the businesses are greater than the assets. Please let us know how the mods turn out for your rentals.

Thanks,