Adversary demanding 100% of bonus for 5 years!!

[narf]

This probably puts it back into the consumer realm.

The definition of consumer debt. . . "debt incurred by an individual primarily for a personal, family or household purpose".

There is no definition in the Code for what constitutes "family". Does it have to be a legal dependant or an immediate family member like a child, parent or spouse? Or, can it extend beyond that to any relative? I do not know. Since the debt was incurred to pay for a relative’s medical bills the next question is, “how close a relative?”.

I have no words of wisdom as to whether or not you can defeat a “presumption of abuse” issue if you convert. If this is a real distant relative you might try the “non-consumer” debt approach. I suppose you have nothing to lose but the complete dismissal of the case. If you can’t confirm a Plan that may happen anyway.

Another suggestion - bate the UST into filing a Motion to Convert. This could happen if you stop filing your monthly reports and stop paying the quarterly fees. Usually the Motion is one for either dismissal or conversion. If such is filed you could simply stipulate to the conversion. Discuss this approach with your attorney. It might be something that is worth trying.

______________

Assuming the creditor has filed an unsecured claim. . . I just want to clarify some points made by others:

1) I am sure a creditor's committee was not formed in your case. It is rare to see one in an individual case.

2) Voting is probably not the definitive issue in your case. What is most likely at issue (tell me if I am wrong) is 11 USC 1129(a)(15) which brings into Chapter 11, 11 USC 1325(b)(2) for individuals. This section provides that if a creditor with an allowed unsecured claim objects to the Plan (different than voting under 11 USC 1129(a)(8)) either the creditor gets paid in full or the debtor must commit 5 years of projected disposable income to the Plan. Your creditor is looking at your historical earnings and asserting that since nothing has changed you must use the historical numbers projected into the future.

Des.

Doesn't matter. It's the total non-consumer liability / consumer liability to reach the percentage. Any mortgage obtained on property that is not your homestead -- and purchased essentially for investment purposes -- is non-consumer debt.

Absolutely eligible. I think you could even convert to Chapter 7 without refiling (just by doing a notice of conversion).

The largest creditor saw the writing on the wall. It is not uncommon for unsecured creditors to dump their BK'd portfolios to companies like eCast Settlement, LVNV Funding, B-Real, B-Line, Roundup Funding, etc. I have never heard of this for secured debt, but they probably knew they were in trouble!

Let me know if the buyer was one of those companies I just listed! They love to buy debt like this and then pester the debtor in Chapter 13s (and Chapter 11s) by objecting to confirmation.

Creditor is not one of those you listed but seems to fit the MO.

Regarding your earlier comment about affadavit of lesser/no bonus, this is not possible. I work for a large multinational company and bonus are based on a complex formula that includes total sales (as one of many I have no influence here). Just angling for a plan that's flexible and allows bonus (if any) applied to debt instead of assuming bonus will remain the same for the next 5 years. It's the main issue to a sucessful plan since bonus is large proportion of the household income.

Thanks to you and all the others for your helpful comments!!

[despritfreya]

Yes, was close family member (grandmother) and to further complicate, I was executor and trustee for her estate (which consisted of the land that the co-signed mortgage was on) and the land was subdivided off of the lot containing her personal residence.

So, let's go back to JB's point. You indicated that the co-signed loan was to pay medical bills. Consumer vs. non consumer turns on the intent of the obligation so it sounds consumer. But what if you could argue you were investing in the property? For example, one who takes out a HELOC and then uses the money to try to save a business can state that the loan, while tied to the residence (a family type debt), was not for a consumer purpose. Can you spin the reason for the debt into something that was not "consumer"? Something to discuss with your attny?

Des.

[narf]

This probably puts it back into the consumer realm.

The definition of consumer debt. . . "debt incurred by an individual primarily for a personal, family or household purpose".

There is no definition in the Code for what constitutes "family". Does it have to be a legal dependant or an immediate family member like a child, parent or spouse? Or, can it extend beyond that to any relative? I do not know. Since the debt was incurred to pay for a relative’s medical bills the next question is, “how close a relative?”.

I have no words of wisdom as to whether or not you can defeat a “presumption of abuse” issue if you convert. If this is a real distant relative you might try the “non-consumer” debt approach. I suppose you have nothing to lose but the complete dismissal of the case. If you can’t confirm a Plan that may happen anyway.

Another suggestion - bate the UST into filing a Motion to Convert. This could happen if you stop filing your monthly reports and stop paying the quarterly fees. Usually the Motion is one for either dismissal or conversion. If such is filed you could simply stipulate to the conversion. Discuss this approach with your attorney. It might be something that is worth trying.

______________

Assuming the creditor has filed an unsecured claim. . . I just want to clarify some points made by others:

1) I am sure a creditor's committee was not formed in your case. It is rare to see one in an individual case.

2) Voting is probably not the definitive issue in your case. What is most likely at issue (tell me if I am wrong) is 11 USC 1129(a)(15) which brings into Chapter 11, 11 USC 1325(b)(2) for individuals. This section provides that if a creditor with an allowed unsecured claim objects to the Plan (different than voting under 11 USC 1129(a)(8)) either the creditor gets paid in full or the debtor must commit 5 years of projected disposable income to the Plan. Your creditor is looking at your historical earnings and asserting that since nothing has changed you must use the historical numbers projected into the future.

Des.

Yes, was close family member (grandmother) and to further complicate, I was executor and trustee for her estate (which consisted of the land that the co-signed mortgage was on) and the land was subdivided off of the lot containing her personal residence.

Not sure I want to bait the Trustee. If I cannot get into Chapter 7 for some technical reason and must have a Chapter 11 plan, I'd like the Trustee on my side. Will discuss with my attorney when we meet this morning.

Yes, you are correct there is no committee. Just one main creditor to convince who is aggressively going after all income using historical earnings (plus asking for certain expenses to be deleted from the budget such as limited financial support for disabled parent living on social security, 401k investments, etc).

Yes, issue is historical income projected into the future. Bonus is large part of my income but I cannot guarantee it in the future since it's based on global performance for a large company, and I am only 1 of many. Current strategy: propose monthly disbursement plus portion of bonus in years that it is earned. Creditor is likely to object - they want a payout equal to historical numbers and then some.

Chapter 7 is starting to look like a bargain, hope I can get there.

[AngelinaCatHub]

JB and I finally disagree on something. . . someone pass the bottle. . . this calls for a party of sorts.

Des.

Could I come too? I once disagreed with each of you. Sooo if I was wrong both times, I do party well. 'Hub

[justbroke]

JB and I finally disagree on something. . . someone pass the bottle. . . this calls for a party of sorts.

I think it could be argued that even though it's a residential lot, it was for investment purposes. I would like to know what type of Riders were attached to the Mortgage/Note at signing.

Where's the party at?

[despritfreya]

JB and I finally disagree on something. . . someone pass the bottle. . . this calls for a party of sorts.

Des.

[justbroke]

So, am individual case. Mortgage = secured, deficiency = unsecured.

Doesn't matter. It's the total non-consumer liability / consumer liability to reach the percentage. Any mortgage obtained on property that is not your homestead -- and purchased essentially for investment purposes -- is non-consumer debt.

With this info, do you still think I was eligible for Chp 7 from the beginning?

Absolutely eligible. I think you could even convert to Chapter 7 without refiling (just by doing a notice of conversion).

Did not have opportunity to negotiate with largest creditor prior to filing, since largest creditor sold mortgage to another creditor post-filing. (Is this weird or what?) New largest creditor would like a plan that's nearly triple what was proposed, though it was expected to increase.

The largest creditor saw the writing on the wall. It is not uncommon for unsecured creditors to dump their BK'd portfolios to companies like eCast Settlement, LVNV Funding, B-Real, B-Line, Roundup Funding, etc. I have never heard of this for secured debt, but they probably knew they were in trouble!

Let me know if the buyer was one of those companies I just listed! They love to buy debt like this and then pester the debtor in Chapter 13s (and Chapter 11s) by objecting to confirmation.

[despritfreya]

Des. I was not clear enough - the major debt is for a residential lot - I cosigned a personal loan with elderly family member for this parcel to cover her medical expenses. . .

This probably puts it back into the consumer realm.

The definition of consumer debt. . . "debt incurred by an individual primarily for a personal, family or household purpose".

There is no definition in the Code for what constitutes "family". Does it have to be a legal dependant or an immediate family member like a child, parent or spouse? Or, can it extend beyond that to any relative? I do not know. Since the debt was incurred to pay for a relative’s medical bills the next question is, “how close a relative?”.

I have no words of wisdom as to whether or not you can defeat a “presumption of abuse” issue if you convert. If this is a real distant relative you might try the “non-consumer” debt approach. I suppose you have nothing to lose but the complete dismissal of the case. If you can’t confirm a Plan that may happen anyway.

Another suggestion - bate the UST into filing a Motion to Convert. This could happen if you stop filing your monthly reports and stop paying the quarterly fees. Usually the Motion is one for either dismissal or conversion. If such is filed you could simply stipulate to the conversion. Discuss this approach with your attorney. It might be something that is worth trying.

______________

Assuming the creditor has filed an unsecured claim. . . I just want to clarify some points made by others:

1) I am sure a creditor's committee was not formed in your case. It is rare to see one in an individual case.

2) Voting is probably not the definitive issue in your case. What is most likely at issue (tell me if I am wrong) is 11 USC 1129(a)(15) which brings into Chapter 11, 11 USC 1325(b)(2) for individuals. This section provides that if a creditor with an allowed unsecured claim objects to the Plan (different than voting under 11 USC 1129(a)(8)) either the creditor gets paid in full or the debtor must commit 5 years of projected disposable income to the Plan. Your creditor is looking at your historical earnings and asserting that since nothing has changed you must use the historical numbers projected into the future.

Des.

[narf]

Des.

I was not clear enough - the major debt is for a residential lot (considered commercial from bank's point of view since there is no home on it) - I cosigned a personal loan with elderly family member for this parcel to cover her medical expenses (stupid I know), property dropped in value ~75% leaving me with an enormous deficiency (high six figures). So, am individual case. Mortgage = secured, deficiency = unsecured.

With this info, do you still think I was eligible for Chp 7 from the beginning?

Did not have opportunity to negotiate with largest creditor prior to filing, since largest creditor sold mortgage to another creditor post-filing. (Is this weird or what?) New largest creditor would like a plan that's nearly triple what was proposed, though it was expected to increase.

[TrainWreak]

Please delete my post if you want but everyone needs commendation once in awhile. You guys & gals deserve a hamster dance just for being so knowledgeable about all this!
My burning question as to why be a moderator of a BK forum or even revisiting here after the discharge has been answered. You want to help and are intrigued by the process at least that's my take.
Sorry off the beaten path. Just got back from the dentist again and I guess torture brings out the truth!

[jst4f]

We also have large real estate debt with high income and qualify for BK7. BK13 was not considered a good option and BK13 never came up. If possible convert to BK7. BK7, total liquidation, sounds scary but it was the best business decission we made.

[justbroke]

So it sounds like some sort of strip down was being attempted, thereby making the 1st mortgage holder a partially unsecured creditor, and giving them a vote (bad strategic move unless you have spoken to the mortgage holder ahead of time).

Exactly my thoughts. A Chapter 11 is all about the "largest" unsecured credit holders which essentially become the committee that votes on the Plan. You should always, in a Chapter 11, have already negotiated with the largest unsecured credit holder(s) to insure a clean vote. This was the scariest part of me going into Chapter 11 since my largest unsecured creditor would have been the mortgage companies!

[AZNoName]

I almost ended up in 11. Made too much to qualify for 7, but *almost* had too much secured debt to fit into a 13. That sounds like the issue with narf, but I don't know how how you could convert into a 7 though...

[HHM]

It sounds like an attempt was made to save the property, but too hard to tell.

Generally, unless the property is way upside down, the 1st mortgage holder wouldn't be the one objecting because they are a secured claim and must be paid. So it sounds like some sort of strip down was being attempted, thereby making the 1st mortgage holder a partially unsecured creditor, and giving them a vote (bad strategic move unless you have spoken to the mortgage holder ahead of time).

Anyway, sounds like inexperienced counsel.

[justbroke]

I was going to say the same thing. I'm a non-consumer Chapter 7 filer! My non-consumer debt was from real-estate investments (over $900,000 worth), so I qualified for Chapter 7 quite easily. However, I went the Chapter 13 route and almost ended up in a Chapter 11 myself. I was lucky to stay under the numbers for Chapter 13 and eventually converted to Chapter 7.

This just doesn't make sense here. It would appear to me that a lot of money is being spent on this Chapter 11. I don't know why Chapter 11 was chosen. Perhaps there is an actual reorganization in process -- attempt to save property? After what I went through... I'm not sure that saving property is the best plan.