Hello -- Could I get a CH7?

[Tom_Mi]

Hi All,
First...Great Site! Glad you're all here. This is my first post...but I've been visiting for a few weeks now.

I'll start with my question, and then tell you my situation.
Question: Can I get a Ch7? (My atty says -- maybe, probably)


18mo ago my fico was 720..and all was well in the world.

Then I bought a 4-unit apt building...all was still *mostly* well in the world.

Then I bought 2 more neigboring 4-unit apt buildings...then things got ugly. I purchased them with high rates, because my Mortgage guy said we could season them 4mo & refi into lower rates.
I think this plan would have worked....but at refi time his lender stopped the program and I was stuck with awful loan terms.

The above situation, a poor decision (by me) to evict bad people & rehab -- followed by long-term vacancy, has wiped me out. I can't sustain the properties, and the bank says my short sale offers (short by about 100k total) aren't acceptable.


Initially I thought of CH13 and keeping the first property (only breaking even), but it's long-term success isn't a guarantee, and I've heard from YOU that CH13 payment plans are draconian.


But my atty says these are business losses and that gets me past means testing...provided my income isn't a problem.
Do you think my income will be an issue?:
- Family of 5
- 3 small kids
- Mom at home with kids (single income family)
- 88k income. (but remember, single income).

The atty thinks probably the single income keeps me near the median...but will a Trustee just send my wife to work, kids to daycare and us to CH13?

Many Thanks.

[Help!]

Depends on your state and whether your debt can be considered "primarily consumer debt". If you were in my state you'd be right at the median, and if your debt is not primarily consumer debt a 7 would be feasible.

[Tom_Mi]

Thanks,

I have very little consumer debt.. 2 cheap used cars paid off, and a credit card up to 8k.
It's the apts (100k short if sold) and huge negative cashflow that's killed me.

[Help!]

I agree with the attorney based on what you've said. You are not subject to the same UST presumption of abuse scrutiny because your debt in not primarily consumer debt. No, the trustee can not send your wife to work and your kids to daycare. They do have the ability to force conversion of Ch. 7 cases to Ch. 13, but this isn't just done on a whim - they have to have really good reason to do so (most of the time it's the result of modification to the filer's means test). If you are surrendering all of these properties, I don't see why you wouldn't be a 7.