Chap 7 with asserits

[84 K in debt]

Hi all, new to the forum, it's really been helpful. But I've got a question that I haven't seen yet (have done a quick search), so if it's been asked and answered before, I apologize.

The wife and I are about 84 thousand in unsecured debt (wow, sounds like my screen name!) and we're looking to declare Chap 7 in the next couple months (lawyer wants us to wait to get under the median income). Thing is, we've got some assets that the trustee will probably want. Here is the rundown...

-Retired Military, now working at Wal-Mart hourly & part time
-Have to wait about 2 to 3 months to get under median income (waiting for the new #'s to come out!)
-Own one car outright, and am NOT upside down in the other (the one we own blue books at about 6,500 and the other about 18,000, but still owe about 7,000 on it)
-Not late on either 1st, 2nd mortgages or car payments
-Haven't paid most of my unsecured debt in almost a year (one company is suing, lawyer says to let them get the judgement and then we can wipe it out in the BK)
-Now won't be able to pay the wife's unsecured due to decrease in income by about 2/3's
-Gonna try to work the "Best Case" software I found in another thread to see if I'm negative each month, and see if the lawyer will go for that (but she's also a certified trustee, so she's probably got a good idea of what will work)
-Filing in Florida, so house is untouchable (homestead)
-Also have nice wedding jewelry, hopefully can be covered by personal exemptions

Okay, sorry for the long post, but wanted to get a bunch of the info out so as not to have to make people ask questions. Since we probably won't be able to protect both cars with the exemptions, we're going to have to pay the trustee over a year to keep them. The lawyer said that since they're both high mileage, maybe the trustee would go with an estimate of what a local dealer would sell them for (to keep the value down).

Here's the thing, if I can keep my assets under about 10K, I think I could pay it all off over the year allowed.

If not...

1. When does the trustee take the vehicles to sell them? Before or after the discharge? I'm thinking if they won't let us get the lower value for the vehicle we own, I might just let them take it and then buy another car ('cause the one we own is kind of messed up, haven't had the $$ to fix it). But will I have to have permission from the trustee to establish a new line of credit? We HAVE to have two cars.

2. Our lawyer said something about having someone come out to our house and value our assets, because most people value their stuff to high. Is this something anyone else has heard of, or do the trustees just usually go with what the filers say they have?

3. If my in-laws help us with the payments to the trustee afterwards (so we can keep our assets), does that have to be disclosed as future income?

Anyway, there are the questions finally.

Again, sorry for the long, long post. Any answers will be greatly appreciated!

84 K in debt

[aa06a47]

Your attorney wants you to get under the mean so you can file a chapter 7. Otherwise, you a chapter 13. You will have to deal with the equity in your cars. The trustee will more than likely either ask you to come up with the money to cover the equity (from whatever source) or he will sell them. Florida has a 1k exemption for (1) vehical. So chances are, you'll lose 1 of them and the other one will require some sort of payment to the trustee.

Here is a link to florida's exemtpions.

http://www.totalbankruptcy.com/state_exemptions_florida.htm

[84 K in debt]

Your attorney wants you to get under the mean so you can file a chapter 7. Otherwise, you a chapter 13. You will have to deal with the equity in your cars. The trustee will more than likely either ask you to come up with the money to cover the equity (from whatever source) or he will sell them. Florida has a 1k exemption for (1) vehical. So chances are, you'll lose 1 of them and the other one will require some sort of payment to the trustee.

Thanks for the reply, but it is already information that I pretty much knew. As for exemptions, Florida allows 1,000 per person filing, not per vehicle really, so if I wanted to reduce the equity I have in each by 500, I could probably do that, although it would just come out the same. And of course since both my wife AND I are filing, we'd get $2,000 worth of exemptions on the cars, and $2,000 exemptions of personal property.

I have spoken with my lawyer already, and I know that she's having me wait to get under the median for the Chap 7 or the short Chap 13. I also know that I can "buy" my assets back from the trustee over the period of one year. I guess I should have been more specific with my question, please see below...

The main question is, when does the DISCHARGE happen? For example, does the discharge happen AND THEN I pay back the trustee? (Because if that's so, then I could get discharged, get a job and possibly be back up above the mean again, and pay for my assets over the course of the year. Or, if the discharge has already happened, maybe I could get a loan for a different car or take some equity out of my house to pay the trustee.) Or, does the discharge happen AFTER I HAVE PAID THE TRUSTEE back for my assets. If that's the case, then I can't get a job making any kind of good money because it will throw my discharge out. I would have to live with the threat of a possible conversion for a year with no money coming in and paying off my assets. (Which is most likely not going to happen.)

So, the problem I'm having is with timlines.

[lrprn]

[edit] The main question is, when does the DISCHARGE happen? For example, does the discharge happen AND THEN I pay back the trustee? (Because if that's so, then I could get discharged, get a job and possibly be back up above the mean again, and pay for my assets over the course of the year. Or, if the discharge has already happened, maybe I could get a loan for a different car or take some equity out of my house to pay the trustee.) Or, does the discharge happen AFTER I HAVE PAID THE TRUSTEE back for my assets. If that's the case, then I can't get a job making any kind of good money because it will throw my discharge out. I would have to live with the threat of a possible conversion for a year with no money coming in and paying off my assets. (Which is most likely not going to happen.)

So, the problem I'm having is with timlines.

This is a frequent problem - you definitely aren't alone struggling with timelines trying to choose the optimal filing date, 84K.

I'm not the best Ch 7 expert, but it's my understanding that all accounts, including payments owed to the trustee, have to be paid in full before a Ch 7 will be discharged and closed. However, if your case proceeds like 95% of them do, you will be closed and out of bk by six months from filing. No guarantees of course, but Ch 7 typically doesn't go on for years like Ch 13. Once you file, you can stop making all non-secured payments to your wife's creditors - how much does that free up for you a month? Is it enough to help bridge the gap?

And I apologize in advance that this could be an offensive question, but are these 'assets' you are worried about are being disclosed in the bankruptcy? If they will be known, then I'm trying to figure out from what you've already posted what you think the trustee is going to go after - your wedding jewelry, perhaps?

Sounds like you have a complicated Ch 7 case - I'm so glad you have a bk lawyer under these circumstances. What does she say about this situation? Good luck, and please keep us posted on what happens, ok?

[kcj]

My experience, in FL, CH7 asset case (although under old law)

We filed 9/1/05, dischared 12/15/05. Contacted by the trustee a week or so later regarding our asset buyback. Agreed upon the amount, and were told to wait for paperwork. The paperwork came about a month ago. Yes, 8 months down the road we are finally starting our buyback.

We won't be closed until our payment plan is complete, but there is light at the end of the tunnel. We thought we were going to have to start the payments in January, weren't sure if the trustee would want back payments once the paperwork was filed, etc., so we were saving up. Now we are making double payments just to be done with it.

The trustee did tell our lawyer he is pretty much overwhelmed and it just took that long for our case to get to the top of his stack.

[Minnymouth]

Yes, I CAN TEST TO THE BACKUP IN THE CHAPTER 7'S waiting to sell off assets. My assets were sold off almost a year ago and case is still OPEN, due to the Trustee not paying the creditors yet......

Nerve wrecking waiting for a closer on this issue.... I've been discharged 2 years now...

If their sooooooo busy, they need to hire some help or get the "lead out of their @@@..........

Nobodies business these days is THAT GOOD..................

My thoughts,

Minny

[kcj]

Yes, I CAN TEST TO THE BACKUP IN THE CHAPTER 7'S waiting to sell off assets. My assets were sold off almost a year ago and case is still OPEN, due to the Trustee not paying the creditors yet......

Nerve wrecking waiting for a closer on this issue.... I've been discharged 2 years now...

If their sooooooo busy, they need to hire some help or get the "lead out of their @@@..........

Nobodies business these days is THAT GOOD..................

My thoughts,

Minny

And lose some of the money they are paying themselves to administer the case? Surely you don't expect them to PAY someone to do what they can take their time to do themselves.

[SinkingFast]

As KCJ said, you can be discharged and not closed until you settle up with the Trustee regarding payments for assets.

While you have what seems like a ton of equity in your cars, most likely the Trustee will accept less. Trustees quick sale for lower than book value. And Trustees have costs to sell. They hire people to do this for them and it costs about 10% to sell assets.

So you're thinking roughly $15K in unprotected equity, the Trustee may negotiate with you to take $7500 to $10K on the cars. That's quick, easy cash for the Trustee without the hassle of siezing and selling the assets.

One thing you can do to help both yourself and your attny regarding the values of the vehicles,............... Document anything wrong. Any repairs needed. If there's body damage or rust damage or numerous mechanical repairs that need done. That all dings the value of the vehicles. Go to a body shop or a repair shop and get written estimates of how much it costs to repair whatever. If you have real repairs that need to be done, the vehicles will look even less appealing to the Trustee.

While you have what is probably very nice wedding jewelry, it won't bring much to a prospective buyer unless you have larger, certified diamonds. I sold all my jewelry to try to make ends meet waiting for things to turn around. The certified diamonds brought a fair price but the jeweler paid very little for everything else.

Take your jewelry to a jeweler or pawn shop looking to sell it and have them give you a written purchase statement. Tell them you want to think about it and leave. You'll probably be surprised that what you paid a minor fortune for isn't worth much in a quick sale situation. Jewelers will often offer scrap price. Pawn shops as little as 30% or less of what you paid originally. But at least you'll have a written valuation of your jewelry for BK purposes.

[84 K in debt]

This is a frequent problem - you definitely aren't alone struggling with timelines trying to choose the optimal filing date, 84K.

Actually, if I can maintain a low amount of income for the next couple months, I should be able to file in November, so I'm not really worried about the when to file problem (I've been doing a LOT of research on BK lately...)

Once you file, you can stop making all non-secured payments to your wife's creditors - how much does that free up for you a month? Is it enough to help bridge the gap?

And I apologize in advance that this could be an offensive question, but are these 'assets' you are worried about are being disclosed in the bankruptcy? If they will be known, then I'm trying to figure out from what you've already posted what you think the trustee is going to go after - your wedding jewelry, perhaps?

Actually, since I retired, I am going to have to stop making payments to my wifes creditors right now. With my retirement pay and some small cash coming in from part time jobs, I can barely make us survive while paying both mortgages and the car payment. So, the BK won't free anything up really. And yes, everything is going to be disclosed, and the main things I'm worried about are the cars and the wedding jewelry (all the rest of her jewelry is not that expensive). See below...

As KCJ said, you can be discharged and not closed until you settle up with the Trustee regarding payments for assets.

While you have what seems like a ton of equity in your cars, most likely the Trustee will accept less. Trustees quick sale for lower than book value. And Trustees have costs to sell. They hire people to do this for them and it costs about 10% to sell assets.

So you're thinking roughly $15K in unprotected equity, the Trustee may negotiate with you to take $7500 to $10K on the cars. That's quick, easy cash for the Trustee without the hassle of siezing and selling the assets.

One thing you can do to help both yourself and your attny regarding the values of the vehicles,............... Document anything wrong. Any repairs needed. If there's body damage or rust damage or numerous mechanical repairs that need done. That all dings the value of the vehicles. Go to a body shop or a repair shop and get written estimates of how much it costs to repair whatever. If you have real repairs that need to be done, the vehicles will look even less appealing to the Trustee.

While you have what is probably very nice wedding jewelry, it won't bring much to a prospective buyer unless you have larger, certified diamonds. I sold all my jewelry to try to make ends meet waiting for things to turn around. The certified diamonds brought a fair price but the jeweler paid very little for everything else.

Take your jewelry to a jeweler or pawn shop looking to sell it and have them give you a written purchase statement. Tell them you want to think about it and leave. You'll probably be surprised that what you paid a minor fortune for isn't worth much in a quick sale situation. Jewelers will often offer scrap price. Pawn shops as little as 30% or less of what you paid originally. But at least you'll have a written valuation of your jewelry for BK purposes

Sinking Fast, this is AWESOME INFO!! I'm mainly worried about the jewelry since we have it insured for it's worth from the appraisal from when we bought it (plus some each year for replacement value). But I didn't even think about how much it would be worth in a quick sale!

As for the vehicles, our lawyer told us to take them to about 3 used-car dealers in town and see what the dealers would sell them for (not what the dealer would give us mind you) and that the trustee might go for that value, becuase there are problems with both cars. Neither one is in the shape that NADA wants them to be in for the optimal price.

So, basically, I'm looking to keep my assets below about 10K, because then even if the trustee won't settle for less, I could possibly afford paying back the whole amount within the 1 year I'm allowed.

Thanks so much to all of you for the answers! I'm feeling better already!

[84 K in debt]

AWESOME answer!

My experience, in FL, CH7 asset case (although under old law)

We filed 9/1/05, dischared 12/15/05. Contacted by the trustee a week or so later regarding our asset buyback. Agreed upon the amount, and were told to wait for paperwork. The paperwork came about a month ago. Yes, 8 months down the road we are finally starting our buyback.

We won't be closed until our payment plan is complete, but there is light at the end of the tunnel. We thought we were going to have to start the payments in January, weren't sure if the trustee would want back payments once the paperwork was filed, etc., so we were saving up. Now we are making double payments just to be done with it.

The trustee did tell our lawyer he is pretty much overwhelmed and it just took that long for our case to get to the top of his stack.

Thank you sooo much for this info! This is exactly what I was looking for! To know that I can be discharged and then start the payback. If I had to pay the trustee for the buyback items BEFORE the discharge, I think I would have been in a ton of trouble. But to know that I can be discharged before having to buy my assets back from the trustee is what I was hoping for, and asking about!

As I stated in my above post, I'm trying to keep the value of my assets down to under 10K (even less would be better!), but then I might be able to pay the trustee back around 1K per month.

Is what Sinking Fast said true, about trustees settling for less sometimes?

Thanks again for the great answers!

[kcj]

We took the offer the trustee made us for our assets because it seemed fair enough, and he was giving us a year to pay it off. In hindsight, I think we could have counteroffered and maybe saved a few bucks, but what's done is done.

We are buying back our business (he took the value of outstanding A/R vs. that balance sheet value which was higher) and our motorcycle (a reasonable estimate of what he could sell it for, less our $2000 exemption). If anything, we would have had some bargaining room on the bike but I'm not positive of that. And who knows, he could have come back and said okay to the lesser amount but wanted a lump sum payment.

We had a figure in mind of what we thought was reasonable and the trustee came in a little under it. So, do your research and know what you think the assets are worth, keep in mind that the trustee will have costs to take possession, store, and sell the assets, and go from there. Best of luck to you.

The process sucks, but in whole I thought we were treated fairly.

[SinkingFast]

Read Post 24 on Page 2 of this thread. I think it will give you hope!

http://www.bankruptcyforum.com/showt...2516#post32516

[AMISLANDER]

Somewhat like you w/car as asset...

I have a 2000 Toyota 4Runner which I own outright. Car is probably worth 10-12K....but needs some major repair work: Catalytic converters, new belts, has dings in rear bumper, check engine light has been on since December of 2004...now my brake light flashes when it feels like it....my mom has a lien that was registered on car back in Jan. of 2005...I filed in Oct. 2005, and discharged in Feb 2006.

My case is listed as an asset & trustee asked for my tax refund...(3K) which I have sent...IRS wants $7K for 2004...so I have notified the trustee of this...I don't know if it's my tax refund which is considered the asset or the SUV...4runner sometimes starts & stalls alot...bad gas (17mpg)....only vehicle I have...I call once a week & ask him to call but he's always on vacation...

Mom's lien is for $7K...I have been told that it's not worth his while to take the SUV...

who knows? I am not repairing anything at this time due to lack of funds & possibility of losing the vehicle...

And I live in FL.....

[84 K in debt]

Means Test complete

Well, long time, no post. Have been trying to survive through the rough times, especially all the Creditor PHONE CALLS all darn day LONG!! LOL But there is good news in sight! Figured out the Means Test (Form B22A) on an Excel spreadsheet at the prompting of my lawyer, and found out that even though I'm well above the median income, I definitely have NO PRESUMPTION ARISING!! Heck, I'm so upside down right now that I can't even pay my car payment and am starving the family to keep the 2nd Mortgage current!

But, that is actually good news 'cause now I should be able to file here anytime! I especially want to file before I get a new job so that I don't have to wait forever to pass the thing again...

I'll be talking to my lawyer tomorrow and letting her know that I want to start the paperwork right away! (Well, as soon as I can come up with the $200 retaining fee that is!! LOL)

One more piece of good news, my lawyer told me that she would make a deal with the Trustee to allow me to either refi my house or get a better 2nd to take some equity out to pay off my assets, so I should be able to keep everything! (Well, I would only do that if I couldn't make the full amount in the year afterwards.)

Okay, thanks to everyone for all the help. I'll make sure to come back and let all know how it's going once the process has truly begun.

84K in debt

[HHM]

I posted this in another thread...but it will have some use here as well.

You need to realize, DISCHARGE is all you care about, for you, receiving your DISCHARGE is the effective end of your case. You don't need to worry about when your case officially CLOSES. After discharge, you can go about and live your life as normal.

The only thing that typically happens between Discharge and closing is that the Trustee is administering non-exempt bankruptcy assets and making distributions to creditors.

In a true No-Asset case, the case will close around the same time as discharge because the trustee has no assets to distribute to creditors, so the case gets closed, there is nothing more for the Trustee to do.

In an Asset case, where the trustee was able to get some money to pay creditors, i.e. a tax refund, a refund of preferential payments, an old car, whatever...the trustee keeps the case open so he can get the proof of claims from creditors, give creditors their priorities, sell hard assets, so he can distribute the funds to the creditors. That is all that happens between discharge and closing, and its nothing you need to worry about at all.

In short DO NOT LOSE ANY SLEEP over the fact that your case has not CLOSED, it's not big deal. As long as your bankruptcy is discharge, you can care less about what happens after that day.