Voluntary dismissal of Ch 13 with intent to file Ch 7

[billjacobs]

HI,
About two weeks ago we voluntarily dismissed our chapter 13 largely because we decided we don't want to keep our house. Our intent it to file a Chapter 7 by 1 Aug. My attorney sees no issue in timing, but I have read on here various time periods, specifically 180 days. Is this true?
We are below median debtors so I don't suspect we will have any trouble justifing the 7.
In addition, we were 7 months into our 13 which had not been confirmed because the mortgage companies didn't file their claim until May. That said, we have a considerable amount in the trustee's account which is suppose to be refunded on 29 June. My attorney said to spend it, does that sound right?

Thanks for any help/suggestions!

Bill

[HHM]

Since you don't care about the house, non-issue on the 180 day rule. It is not that you cannot refile within 180 days, it is that you might have to demonstrate to the court that the repeat filing was in good faith...not really an issue. Otherwise, the automatic stay automatically terminates as to the secured claims...but since you are surrendering the house, you don't care.

It probably would have been easier and better had you simply converted the 13 to a 7, but not a big deal.

[justbroke]

The 180-day rule is when your case is dismissed with prejudice. The judge will usually do so when you attempt to dismiss a Chapter 13 where a Motion for Relief from Stay is pending (or just granted) against real property. This is to allow the lender to foreclose -- if they so choose. Otherwise, you could file a Chapter 7 just minutes after having your Chapter 13 case dismissed (and showing as such in PACER).

I don't know why you aren't converting instead? What did your attorney say about converting and why it is better to dismiss and then re-file? Would be interesting to hear the strategy.

If there is money left in the account, you do need to spend it. The question will be whether it needs to be spent down before "re-filing". In a conversion, you wouldn't need to spend it down as it's not property of the Estate. If you are dismissing and refiling, that money would need to be exempted or the Trustee might try to keep it (even by having the Chapter 13 Trustee turn over the funds directly to the Chapter 7 Trustee... if the cases are real close together).

I hope it's not so much that you can't figure out how to spend it! You'll need to pay your attorney too, so I guess some of it will be for the Chapter 7 case.

[HHM]

Concur...as for the money already paid in the chapter 13, had you converted, you WOULD have kept those funds minus a token trustee fee for the chapter 13 trustee. The conversion to chapter 7 relates back to the filing of the chapter 13, as such, the money paid into the chapter 13 are from "non-estate" funds, so you would get them back and the chapter 7 trustee can't have them. With a dismissal, you are filing a brand new chapter 7, as such, a new filing date will be created...so, you will need to get the refund and spend it before filing.

[justbroke]

We responded at almost the same time. I just want to know the strategy behind a re-file versus a conversion. I do understand there are reasons for each. In some Districts, they always go back to the day of filing the Chapter 13 to determine eligibility so maybe that's the case here. I'm just interested because there is so much money in the Chapter 13 Trustee's account, that it could be interesting.

I say so, because I had over $11K in my account when I converted. Neither Trustee tried to claw back the money because it was a conversion. I actually had to file a motion to turnover on my Chapter 13 Trustee because it took almost 2 months to get the money from them and to stop the wage order.

[billjacobs]

Thank you for taking time to read and reply, really do appreciate it.
We didn't learn our lesson real well the first time around, we filed a Ch 7 in May 2004, so when we filed the 13 in December 11 we weren't at 8 years between filings yet. I don't know what % our plan was suppose to be, but we only were paying the secured debt, mortgage arrears and our attorney, plus the percentage to the trustee. The only thing that got paid monthly was the trustee fee and my car payment, so the refund we have coming is significant. Our plan payment was 2570/mo. I do have car repairs that need done and dental work for the kids. I intend to put the filing fee and attorney fee for the Ch 7 aside. I also suspect that we will need to pay off our attorney for their work on the Ch 13, although I don't know how much that will be ( I know what was agreed to, just don't know if all is required to be paid). We can spend the funds with buying expensive stuff and actually don't own anything of value except a van, so I could probably exepmt any household goods we purchase. Really I guess I just wonder how it would look. We received notice of default on both the 1st and 2nd mortgage in the mail the same day we got the dismissal order, so I don't suspect the mortgage companies will let me have too much time to wait before I need to file the 7. Truthfully, I just want to get it done and move on and maybe not stress when I have $4.32 in the bank with four days til payday!

[billjacobs]

Justbroke,
That's about what we have in the trustee's account. I talked with the closed case person at the trustee office who said that payment would be mailed on 2 July in care of my attorney, but made out to my wife and I. The order to stop garnishment was sent on 12 June, but didn't reach my payroll folks in time ( I work for the gov't), but am hopefull that by the end of July they will actually stop taking my money!