just filed and received money..

[jeffro389]

so a buddy of mine filed chapter 7 last week with about $35000 in unsecured debt after his divorce..3 days later his dad died and he has about $40000 in a savings account left to him..i know he has to claim this if he accepts the money, but how much would he get to keep? can he ask for a dismissal and try to negotiate with the creditors?

[justbroke]

He cannot voluntarily dismiss a Chapter 7 and it makes it more difficult that once the Trustee learns of the potential inheritance, the case will not be dismissed. The inheritance must be reported. I can not tell you how much he would keep. It would really depend on any amount that he could exempt, and then the rest would be based on how many creditors filed a claim.

Your buddy should be speaking with his/her attorney. It does not matter if he "accepts" the money, it matters if he is entitled to a distribution from the decadent's estate.

Personally, I would never try to negotiate with creditors. While you could get a few creditors to negotiate, it almost never works. You will always get a few creditors that just don't want to negotiate, or they will negotiate, take your money, and then sell the balance to a junk debt buyer (JDB). The JDB will then bother you until the cows come home and may even file suit. (There may some circumstances where I'd negotiate with a single or maybe two creditors where I could actually negotiate that the debt would not be sold.) Additionally, there are tax implications when negotiating debt (the gain reported on form 1099-C Forgiveness of Debt).

[jeffro389]

ok..but the trustee will only take whats owed and nothing more, for the most part, correct? maybe he could convert to a 13 ? he really is in a bad place and anything he could get over whats owed is imperative

[despritfreya]

What state is your friend in? Has he lived there for at least 2 years?

Des.

[jeffro389]

NC and he has lived here for 40 years

[despritfreya]

Unfortunately, it appears that your friend is not going to be able to claim any exemption for the "inheritance". He really needs to discuss his options with an attny. An attempt to seek a dismissal of the case will not work. If the 341 has not taken place he may be able to "quietly" get out by not appearing but this should only be tried after confirming how such matters are handled in his locale.

Converting to a 13 makes no sense since he would have to turnover the proceeds anyway - in one form or another.

If he stays in the 7, my suggestion:

1. Advise the Trustee of the asset;
2. Ask the trustee to issue a "notice of bar date for the filing of proof of claims";
3. Turnover the funds to the Trustee or have them held by the attorney in a trust account;
4. Once the bar date passes, ask the Trustee to calculate how much will be needed to pay all timely filed claims and all administrative expenses;
5. Use the funds to pay #4 and, if anything is left over, those funds are returned to your friend.

Des.

[jeffro389]

I appreciate all the advise.I was wondering about the "missing 341 option" just for a dismissal for him..He does have an attorney, but before he tells them, he wanted outside opinions since anything he tells the att will be mentioned to the trustee..he isnt trying to hide assets really, just wants what works best for him

[LadyInTheRed]

He should tell his attorney about the inheritance. There is nothing to gain by not telling his attorney and nobody more suited to advise him than his attorney. His attorney does not have to tell the trustee everything, but will advise him what must be disclosed to the trustee. If the attorney says the inheritance must be disclosed, then not disclosing it would be foolish. What's best for your friend is to talk to his attorney about his options.

Missing the 341 MIGHT result in the case being dismissed. But, that should not be done without the advice of his attorney.