Too much income for CH 7; too much debt for CH 13. Has anyone heard of this?

[louie123]

Hi everyone,

Quick rundown of situation:

Chapter 13 filed in March.
$280K in credit card debt.
$150K in personal loan debt.
All unsecured.
May 22nd is the deadline for creditors to file claims.

Income $125K/year. Separated. Own a home and equity is canceled out under exemption.

When I expressed my huge concern about my unsecured debt exceeding the $419K unsecured debt limit for a Chapter 13 filing, my attorney said that “Never do all the creditors file a claim, I have never seen it in at least 10 years, so you should come under the limit as long as 1 creditor doesn’t file.”

Most creditors are $15K-$30K owed, so he’s correct that if one doesn’t file and the rest do, I will fall below the $419K limit.

Now, is there any truth the the above statement? I have about 17 creditors. I have been checking PACER daily and I see there are $337K of claims thus far, $28K of which doesn’t count because of a car lease, but they filed a claim anyway even though I’m assuming the lease.

What can I possibly do if all the creditors file for a claim and I’m over the Chapter 13 limit, but don’t qualify for a Chapter 7?

I am a nervous wreck and considering suicide at this point. Honestly have no other option unless I leave the country.

Also, I have already made 2 payments to the trustee before the plan has even been confirmed; which is sometime in June.

Please please please, I GREATLY appreciate any advice here.

Thank you all and stay safe.

[despritfreya]

Unless there is case law in your district supporting the argument that eligibility is based upon the actual claims filed, such an argument is not in conformity with the language of the Code.

For the purpose of Chapter 13 eligibility, the Section 109(e) of the Bankruptcy Code states:

Only an individual with regular income that owes, on the date of the filing of the petition, noncontingent, liquidated, unsecured debts of less than $419,275 and noncontingent, liquidated, secured debts of less than $1,257,850. . . may be a debtor under chapter 13 of this title.

(Emphasis added.)

Based upon the language of the Code, you look at the schedules filed by the debtor on the date of the filing, not the claims filed by creditors sometime thereafter. If the non-contingent / liquidated unsecured debt is over the 109 limit on the date of the filing then one is not eligible for Chapter 13.

Now, the reality is, unless someone raises the issue either as a Motion to Dismiss or as part of the Plan Confirmation process, many judges don’t care. So. . . you throw it on the wall to see what sticks.

I would not lose sleep at this time over the issue. You are about $20k over the limit. My guess is that no one really cares. Wait for the issue to be raised before panicking.

Des.

[Franco]

I am a nervous wreck and considering suicide at this point.

My Chapter 13 is much simpler than yours, and I'm sorry I cannot give much advice... But I will say this, no Debt is worth killing yourself for. I'm sure you were just saying that, but I don't know if you were serious. Take it from me, a man that lost many loved ones in my early 20's, I had a shotgun in my mouth just 4 years ago, wrote a suicide note, the whole bit. I'm 1,000,000% Happy today that I didn't pull the trigger! Stay Strong.

[despritfreya]

I had a shotgun in my mouth just 4 years ago, wrote a suicide note, the whole bit. I'm 1,000,000% Happy today that I didn't pull the trigger!

Many, many hugs to you for not taking the wrong path.

Des.

[Franco]

Many, many hugs to you for not taking the wrong path.

Des.

Thank you so much, yeah I'm a stronger person today believe me.

[louie123]

Have some additional catastrophic information about my case in this post.

I am suicidal and seriously want to get it over with today. There is no way out of this.

[eap82]

Louie, it is going to be ok. Please don't hurt yourself, there are ways to deal with this. I was in your shoes in July 2020, I ended up getting help and am doing much better now. Reach out to get help, this is not the end of your world. I promise. It won't be easy but work with your attorney and find a way with them to get a payment you can afford. Look at your expenses carefully and try and sort out what is happening there, from your other post it looks like you do have DMI somewhere. You already got advice over there about your 13 plan, I just want to reach out and give you some hope that this can be dealt with.