Chapter 7 Diary

[Vandervecken]

Update:

Over the weekend, the trustee changed my case to "Asset" and mailed out the notifications for creditors to file a claim. Deadline is 5/15. Now I must wait to find out how much equity the trustee thinks I have, and for my attorney to negotiate with him.

On a personal note, I suspect my ex-wife (the reason I filed) is going bat-crap crazy with all the legal mailings she's getting on this case. I am following the divorce settlement to the letter of the law, and there's nothing she can do about it. Every joint debt I have from the divorce settlement has been reaffirmed (and to be honest, at surprisingly good terms.) But I can imagine she's nervous as hell, maybe even racking up legal fees to review the paperwork. (Please note my lack of sympathy at the thought of my ex-wife having to pay legal fees out of her own pocket.)

[Vandervecken]

Follow-up:

Traded emails with my lawyer today; she told me to just be patient, there's nothing to worry about. In our district a three month extension request is normal; with just a single asset the trustee may be done before the motion to extend actually goes in front of the judge.

It's hard to be patient.

[Vandervecken]

Your posts are always thought provoking and educational! You're right, I have a special reason to save this house, and the equity isn't "that" much. And you're right, I'm an old fart (low 50s) in a technology career.

As far as the assets, there is only a single asset not exempted, the rental house. It should be straightforward, but I don't know what the trustee's schedule looks like. Maybe he's simply buried in paperwork and cases. So far the only documents filed were the request to hire himself as an attorney (which was approved today) and the motion to extend objections to discharge, which has been given a court date in six weeks. The case still has the 341 meeting open.

And if i think of turning lemons into lemonade: of my unsecured debt, over half of it is student loans that cannot be discharged. So of any money I pay in to redeem my equity, half of it will go to student loans I have to pay anyway. I can live with that (lol).

[justbroke]

I can tell you that I have personally had zero impact from employment background checks and federal government and law enforcement background checks.

An unscrupulous employer seems to always find a way to get rid of someone. I would hope that I never work for one but then, again, I may be working for one and do not know. Oblivious.

My post was only meant to be thought provoking and to make sure that you have planned for your personal retirement. It reads as though you may be at that age where high-tech employers like to find "some" reason to let go of their senior staff (typically over 50 and making $$$). I was only being reflective of how I spent my entire retirement savings (significant $$$$) trying to save property. You appear to have a noble reason to save the property.

As for the discharge versus closing, it looks like your case will take some time to close. The Trustee is interested in one or more assets and that can take some time to liquidate the estate and process claims. I assume that the Trustee has also sent notice to the creditors indicating that there will be a distribution and established a bar date to file claims?

[Vandervecken]

Good evening, JB!

As far as the house, it's "more" than a normal investment property. It's next door to my own house. My mother is becoming frail in her old age and I bought the house several years ago to be hers when she needed to move in next door. In addition, my ex-wife's name is still on the mortgage, and the divorce agreement explicitly states I cannot surrender it in bankruptcy. Fortunately, it's a profitable house, and even paying a few thousand to redeem it will be worth it.

As far as my employer... well... sure, they cannot fire me for being in bankruptcy. Just like it's illegal to target older (higher paid) employees for layoffs. But my company can "arrange" for me not to be assigned to projects, resulting in few/no billable hours. And that would result in being laid off. Plenty of ways to skirt the law and an uphill burden of proof for me. They would "know" because the case would be open when the company spins off and our background checks are redone.

[justbroke]

I don't know why you're going to use a retirement account to save property. Second, why are you worried about a discharge? Your company doesn't even know, and a company can not fire you solely for the reason that you filed or are in a bankruptcy.

[Vandervecken]

Update:

Tomorrow is the second continuance of the 341 meeting. Today at 5 PM, the trustee filed two new documents:

First is an application by the trustee to hire himself as attorney. I'm pretty sure this is because he has decided this is an asset case. I knew this was a strong possibility, and I can cash out an IRA to redeem the equity in my rental house.

Second is a motion for by the trustee to extend the deadline for objecting to discharge. I assume this is also routine, that he's decided this is an asset case.

Problem is with my employment and clearances. My company is selling my unit off to another company, and looking for any excuse to reduce headcount. Any delay in the discharge will push me into the selloff time frame. So now I'm worried.

[lightning65]

My bad, I'm in a chapter 13. Good catch.

[justbroke]

Hi, just wanted to join in. I am also going through a Chapter 7. After my creditor meeting, Nov 2016, I have received "request" from the Trustee for more bank records. I have also been notified recently notified that they will be taken my tax refund, just a heads up. My Confirmation hearing is later this month. It's been a very rough going, not easy at all. My best to you.
Michigan

Are you sure you're in a Chapter 7, or are you in a Chapter 13? You are using "confirmation hearing" which doesn't exist in a Chapter 7.

[lightning65]

Hi, just wanted to join in. I am also going through a Chapter 7. After my creditor meeting, Nov 2016, I have received "request" from the Trustee for more bank records. I have also been notified recently notified that they will be taken my tax refund, just a heads up. My Confirmation hearing is later this month. It's been a very rough going, not easy at all. My best to you.
Michigan

[Vandervecken]

No, he's just trying to determine if the rental house equity is worth pursuing.

[leonel9]

Out of curiosity, is your trustee asking for any additional documentation (e.g. bank statements) while your meeting is being continued? My trustee has asked for bank statements up to the date of the 341 meeting. This has been a little challenging b/c some statements will not be produced until after the meeting (e.g. Jan statement available Feb 4th, but 341 meeting scheduled for Feb 2nd). I can only imagine what will happen if I don't have everything she is requesting -- it could be continued, requiring more statements. My attorney says she is unique in asking for statements after filing.

[Vandervecken]

The 341 continuation was earlier this week. My attorney told me I was not required to be there, so I didn't go. Her paralegal told me my case didn't come up.

I checked PACER last night, and the trustee has continued the 341 meeting AGAIN... the new date is now in February, a few days before the original 60 day deadline for objections to discharge.

This is seriously frustrating... I know that bankruptcy is a marathon, not a sprint, and I know we've had Thanksgiving, Christmas, New Years and now MLK holidays to disrupt the work schedule. But I really want to put this behind me.

[Vandervecken]

341 Meeting Day

So today ended up being a mixed bag. My 341 meeting was this morning, and no, I did not sleep well. My attorney had assured me everything was fine, but we all know that being nervous is part of the process.

Before going to the meeting, I did a last-minute check of PACER, and saw a new flag: MEANSNO. Yay! I know my attorney had told me several times not to worry, the means test was straightforward and in my favor, but still it was very good to see the status.

Then it was on to the 341 meeting. Several people went before me, so I was able to get a good feel for the trustee. He comes across as fair, expert in the cases, and absolutely no-nonsense. Perfectly fine by me. After about 30 minutes it was my turn. Everything was straightforward, until he came to the rental houses. As a reminder, I have two left: one has some equity, the other is significantly upside-down.

He asked some specific questions about the legal structure, especially the title being under a single-member LLC. They were not in the tone of being accusatory; rather they were in the tone of trying to put the numbers into the correct column. But at the end, he looked at my attorney and said “there seems to be significant equity in this rental house. I’m going to continue the meeting, so I can look closer at the numbers.”

To be honest, this was not a surprise. Here are the numbers:

Appraised value: 156,000
Mortgages: 132,000
Wildcard exemption: 3,000
-------
Equity: 20,000

Against the equity we have the expenses to sell:
Agent commission: 9,300
Closing costs: 2,000
-------
12,300

Amount to trustee: 7,300

So yes, there is some equity, if the trustee chooses to pursue it. The numbers above do not include any costs of breaking the current tenant's lease, cleaning up the house, etc. That's a lot of effort for the trustee. But in case the trustee wants to pursue, I have an IRA that I can withdraw cash from in order to buy back the equity from the trustee. The frustration will be in waiting to see his response, then make our offer. And of course we have the holidays to slow things down more!

But, it was another step forward.

[LadyInTheRed]

Hi Vandervecken,

I am glad things are moving along, mostly as expected. I am not surprised by the issue with the LLC. Even if it weren't a single member LLC, lenders often require a personal guaranty from an LLC or partnership. I bet you signed personal guaranties when the LLC obtained credit. Those guaranties are discharged in your BK. Without somebody else to guaranty the LLC's debts, the creditors close the accounts. The same thing happens if the guarantor dies and there is no qualified person to sign a replacement guaranty.