6/5 Ch13 Dismissed: Now -> Ch7 or Don't? (Long...)

[NextLevel]

Sorry - don't mean to draw attention. But, spend a moment, if you can, and ponder my dilemma. Cheers!

History & Relevant Facts:

[Chapter 13 History (Filed: 12/04, Dismissed 6/06)]

• Illinois, Joint Filing of Ch13 12/2004, for debts ~$45K.
• On plan until 6/5/06 - dismissed due to falling behind in payments (trustee gave me no leeway).
• Final 10 days started 6/5/06 - expires 6/15/06.
• Attorney in court, froze, didn't know 'what to do' (even though we discussed, planned and agreed to him asking then/there if dismissal for Ch7 conversion)
• Asked attorney after-the-fact to file Motion to Vacate Dismissal and, following that (if approved), Chapter 7 Petition

Desires & Goals:

[HOUSE SITUATION]

• I prefer to avoid foreclosure and sell for equity
  
• Preferably petition Chapter 7 Trustee to allow me to sell the house -- providing buyer contract, etc.
  
• House value: $310K (est by longtime r/e agent friend, plus www.zillow.com, etc -- many estimates, comps, etc).
  
• Principal is $242K, Arrears are $12K. Total due to Mortgage Company ~$255K.
  
• Use the 'homestead exemption' where possible. In IL, they use Fed exemption, but key question -- do they use the OLD LAW (since I filed original Ch13 before 10/05) or the new? This also applies to most of the law surrounding the Ch13. If I do, however, use the homestead exemption, I'm looking at $30K from the sale -- to me/wife? Sounds too good to be true.

[PERSONAL ASSETS AND MONIES]

• NO ASSETS -- I have absolutely zip: no stocks, bonds, money in the bank, etc. If I convert/file to Ch7, does the trustee ALWAYS look at bank statements? The only thing I'm worried about is a $5K payment coming to me this week (what a freaking coincidence) from a lawsuit where I sued a home contractor 6 years ago, and they're finally paying me. I want to desperately relieve some stress and take the wife and kids to Disney, etc. Obviously, if I put the check in the bank, and then take the money out, the Trustee upon examination will go WTF? Right? Or Wrong. What's the WORST that can happen? I absolutely will not LIE, but I will not force myself to suffer needlessly. My feeling is that with $60K in equity in the house, and a Ch7 debt load of ~$55K, that should be plenty.
  
• [B]EXEMPTIONS -- [B]The problem is, if I use the exemptions, then the trustee really only has about $25K to pay to my creditors, one of which is the IRS, who will undoubtedly get first dibbs on that coin. That being said, it seems like this is a no-win situation. In fact, has anyone had experience using the homestead exemption -- and specifically, do they get the money after discharge, long after discharge, etc?
  
• BANK ACCOUNTS -- Finally, I don't know if the trustee will give a flying donut, but I do make a good amount at my job, and it's all direct deposit. Do trustee's authorize freezes of bank accounts, etc? If this happens, I'm up the proverbial creek without a paddle of any kind, and will not be a happy camping fool. Any suggestions on this? Once I file 7, isn't my bank account noted, but future deposits after a certain time (after discharge, I assume) are protected and not subject to seizure. The thing here is, it can be 120 days between Filing 7 (conversion, actually) and the discharge. That means, during that time, doens't the trustee have power to go into the bank account and grab what's there? Evil bastards. I got three kids and wife, a dog, cockroaches, mice and a father-in-law to feed and if they, of yeah, myself, and if they take that money out I'm going to kick someones a$$. I mean it. ARG!

All funniness aside, does anyone understand what I'm saying? The whole grey-area of money during a Chapter 7 - sucks a$$.


OTHER RADICAL OPTIONS (FOR FOOLS AND SAINTS)

What if I just say SCREW IT, and don't even pursue the Chapter 7? Then what. The Ch13 case dismissed on 6/5/06 (Monday), and my attorney tells me that I have only 10 days (meaning, 6/15/06) to keep protection - automatic/stay over me. Without filing Ch7 immediately, I'm expecting:

[PROBLEMS TO EXPECT IF I DON'T FILE CHAPTER 7 IMMEDIATELY:]

• Lawsuit continuation - existing lawsuit
• Foreclosure continuation - existing foreclosure suit (status: 1st hearing was scheduled, but suspended due to Ch13 filing)
• New Lawsuits - creditors listed and affirmed on the Ch13 matrix
• New Reposession Suits - 1 creditor
• Misc Problems/Calls/Letters [who really cares about those, I'm off the grid anyway]

The BENEFITS of not filing Ch7:

1. Screw the judge, jury and petitioner (lawyer old school term) -- I'm going at this myself. I've done several lawsuits, and am familiar with the Civil Rules for Court Procedure, so I'm not scared of much here. I've also worked in an attorneys office and I've been typing legal correspondence, and reviewing legal paperwork most of my entire life. Not really scared. Handling all of these suits in parallel -- maybe taxing.
   
2. The foreclosure question -- if I opt out of filing a Ch7 -- then the foreclosure continues, and I'm at the mercy of the judge hearing the foreclosure case. Will they let me drag my feet if I'm attempting to sell, given the fact that I have quite a bit of equity in the home?
   
3. If I don't file Ch7, then won't all of the other entities I owe money to attempt to pursue me with individual lawsuits, and then attempt to secure a lien against my (now in full foreclosure) property, making my own personal sale of the property difficult?
   
4. Regarding foreclosure, wouldn't a died-in-lieu of foreclosure be a better option, that way quickly getting the home out of my hands (and preventing the attachment and liens against it by the other blood suckers). The problem here being that I would lose ALL equity, correct?
   
5. A short sale doesn't apply, because I'm not underwater at ALL with this property.
   
   
6. Well, I've asked you all for ALOT of information, so I appreciate ANYTHING you can say, review, recommend or just comment on. Hell, if you want to laugh and/or cry with me, please do so. I'm just an average Joe trying to figure all this crap out.
   
7. The thing is, I can SEE The GD Rainbow just ahead of me, to the left, behind some bushes. But the Ch7 dilemma and the dismissal of the Ch13 are like a large chasm that's just opened up between the bush and me, and it's filled with lava and dotted on each side with advertisements for "Lava-Proof Bridges, only $310,000!! - Order NOW!!".

Sorry.

[anonymuse]

In a straight Chapter 7, if you have non-exempt equity, the trustee has your house sold, your secured debts are paid first, and then your unsecured debts. And, yes, believe it or not you get a check for the amount of the homestead exemption, which, in your case, appears to be $30K.

Did you have a change in income or expenses? If so, did you ask for leeway, or did you file an amended plan?

[NextLevel]

Fell Behind. ARM kicked in during Ch13, plus additional living expenses of supporting father-in-law, yadda yadda. So, my attorney tried for an amended plan, but I couldn't have the current trustee payment ready until the 15th, hearing on the 5th, no payment yet? -> dismissed.

I expected this. We've been living in a $25/dollar margin each and every month, alternating which bills get paid (utils, etc) late which month. At this point, I'm such a budgeting guru that if I had money in my pocket every month, I'd actually have a method to start saving it!

But seriously? Now I'm thinking that the Chapter 7 will be preferred, because of the equity exemption. I would love to start our lives over with $30K in the bank, because that's been our problem all along.

Additionally, once you factor in the removal of the higher 2/28 ARM payment (that consolidated our 1st, 2nd and 3rd several years ago) with the outrageous Ch13 payment, I'm looking at having ALOT of spare income every month, even after renting a home or a large apartment, etc.

In the end, I'm not worried. I'm just looking for all the pitfalls that a Chapter 7 might throw at me right now.

Thx for the response, btw.

[alh]

If is is dismissed and you file under chapter 7 it will be under the new law. If you convert you will still be under old law. So it might be better to convert if possible just for that reason.