What happens to debtors property if things go bad?

[bornfree2]

What happens to the property of debtor if the case is dismissed in whatever manner and no discharge? The trustee keeps everythign and distributes everything to creditors? AND still debtor owes? What a nightmare if so...

And what about property that is claimed exempt? The power of dismissal just waives that away magicaly?

I was reading a filing on recap last night where a trustee was giving arbitrary reasons for dismissal. Things like the chapter 13 plan was 'hard to understand' and 'debtor did not provide tax returns only transcript' (which is actually an option debtor is given). Basically they objected on grounds of poor records, lack of cooperation, etc entirely specious.

The debtor tried to object saying 'give me more time to amend and to work with trustee, etc'. In other words 'give me a chance to negotiate and assert my rights'

The entire docket was a back and forth of objections and hearings...and the debtor was Pro Se...setting a target on their back I guess.

I find it hard to believe a singular person who is not a judge is given that much power to essentially rob another of their property with capricious arguments.

I dont have the link handy but i will see if i can find it again. very sad case..the person had no assets, high debts, and was being crucified by the power drunk trustee

[JellyBeany]

If a BK is dismissed, the Trustee no longer has any power or authority to take possession of any assets. The moment the case is dismissed the Trust is dissolved.

[bornfree2]

If a BK is dismissed, the Trustee no longer has any power or authority to take possession of any assets. The moment the case is dismissed the Trust is dissolved.

But what about actions they took during that period of authority (case open). If they claim bank accounts, close them, or perhaps mess with tenant/landlord relationships by sending demanding letters, etc. In addition I believe they can demand surrender during the case... in short they can be abusive while they have that power then walk away with clean hands?

Im most concerned about old accounts on paypal that have great history and reputation.... do trustee's get to mess with that and i have to reclaim it back somehow (probably impossible with the paypal red tape)

thank you for your insights

[justbroke]

bornfree2 you are overthinking this again.

Chapter 7 cases are dismissed by the United States Trustee (UST). You'll know at the 341 Meeting or shortly thereafter if they are interested in your case. The Chapter 7 panel trustee will also be aware because they communicated (the panel trustee works for the UST). No action would be taken on property if the UST is seeking dismissal.

Dismissals, if likely, would be in the 5% of cases that have complexities. It would be that they are over-the-median and show too much DMI (disposable monthly income), totality of circumstances, or fraud. Without considering fraud, the other two cases will likely end in a conversion and not a dismissal. In fact, 99% of Chapter 7 cases receive a discharge (Source: US Courts).

In some rare situations, if it's an asset case, the Chapter 7 panel trustee the case will proceed without a discharge. Liquidation will occur but the debtor receives no discharge at all. They still owe the creditors if the liquidation didn't satisfy the debt(s).

These are extreme and rare outliers and are really not worth discussing. That's because it just creates angst and dread from the 99% of debtors that receive a normal discharge in a Chapter 7. (Some number actually convert to a Chapter 13 so the 99% doesn't include the conversions.)

[bornfree2]

bornfree2 you are overthinking this again.

Yup and i thank you for bearing with me during these stressful times

[justbroke]

Once you file, it won't be stressful. Other than finding my soulmate, the day that I walked out of the courthouse having just filed my Chapter 13, I was walking on cloud nine. People could see that I was happy, despite the $20 in my pocket and the $18 that I'd have to spend to get back home.

[bornfree2]

Once you file, it won't be stressful. Other than finding my soulmate, the day that I walked out of the courthouse having just filed my Chapter 13, I was walking on cloud nine. People could see that I was happy, despite the $20 in my pocket and the $18 that I'd have to spend to get back home.

I dunno. Without income and the fact that all access to money and accounts gets given away and locked up for who knows how long, the fact that creditors could get nasty at 341 and APs or objections to exemptions.... the fact that the lease agreement (month to month now) will automatically get severed and the landlord now has an opportunity to not renew so they can get new rent levels ... the fact that ill have the scarlet letter and not be able to rent a new place ... the fact that i dont have any income going into it. yeah, i got a lot to be stressed even after i file.

sure the paper work being over will be a relief... but that will just be the beginning of the next pressure cooker.

discharge, steady job, stable housing...true fresh start...then i can rest

[justbroke]

I dunno. Without income and the fact that all access to money and accounts gets given away and locked up for who knows how long, the fact that creditors could get nasty at 341 and APs or objections to exemptions....

Everything you just wrote either never happens or nearly never happens.

• Your accounts don't get locked (unless it's Wells Fargo which are notorious for this).
• Usually, not one single creditor ever shows up at a 341 Meeting. It's useless for them to show. The only people that show, if they do, are small creditors such as credit unions and they usually only want to know about the condition of a car (and will take a picture of it that day if they can).
• What APs and what objections? APs are, for the most part, rare. In any case, most APs are started by the debtor, not the creditor.
• Lease agreements re not "automatically" severed. The fact that you're on a month to month means that there is no unexpired executory contract in force. (A lease it a type of executory contract.) So long as you're not stiffing the landlord, you can continue to use the month-to-month until such time as a.) you no longer want tenancy, or b.) the landlord no longer wants your tenancy, and you both follow the terms of the lease regarding notification.
• A landlord always has the opportunity to not renew when it comes time for renewal regardless. This is just basic contract (and lease) law and nothing to do with bankruptcy.
• Bankruptcy is not a scarlet letter. personally I a.) 10-days after discharge obtained an apartment from a national (major) apartment manager, b.) 60-days letter I guaranteed another apartment for a family member, from another national apartment manager. I recently also applied to several different places and were approved while in an active Chapter 13. I did not need to pay the normal deposit and paid a mere $300-350 in all of the instances (and the rent was $1,500-$2,200/month).
• If you need long-term assurances, it is always best to have a lease... never a month-to-month. A friend of mine was on a month-to-month for 7 years. She did not renew and the landlord sent her a quit/vacate notice. She asked why? They said because she went too long with no lease and she could choose to sign a new 1-year lease, or leave. The lease protects the tenant more than the landlord.
• If you don't have income, you need to get income. Bankruptcy will never solve income issues.

I keep saying this, but you are overthinking this. One should always worry about income stability, shelter (an enforceable and unexpired lease), and their well being.

You are probably better off finding someone to take this pro bono because I'm afraid that you're overthinking this and may make mistakes that cause you headaches later. One would be rejecting the unexpired lease, thereby notifying the landlord and them saying "fine... leave." The other could be putting the landlord on Schedule G (Executory Contracts) when you're month-to-month and then putting them on the Mailing Matrix. These are reasons people hire an attorney, or at minimum seek pro bono services at the courthouse.

[bornfree2]

OKAY OKAY. i will pipe down for a bit with my concerns.

The good thing is california has stronger rental protection laws than usual. From my quick research this afternoon after my latest freakout, it appears month to month cant be broken without good cause..primarly due to non payment (i am fully current and intend to be going forward one blood/plasma donation or another), illegal activity, or damages. In other words, if you keep paying, you behave well you cant be evicted on month to month.

The only way they can make you move out is if they pay you a relocation cost and that only after 2 months notice. Several places in california have rent control even stronger than this

Plus the covid thing that i applied and got accepted gives me even more protections if I had non payment. But i dont intend to do that at all. I fought to get my landlord paid when I couldnt last year and they got paid 100%. There is no back rent. And it will continue this way going forward!

So your saying if its a month to month and i dont owe back rent, I dont have to put them on the matrix? That would solve my worries right there and now, since if they dont need to know and i dont need to tell, and i pay my rent, then problem solved.

And so you know, a lawyer i talked with this morning told me the exact opposite.. that i have to put the landlord on the matrix and the BK will break the lease. I explained it exactly and clearly as I could (that i was current and that its month to month).

In other words, they are clueless/lousy ... they just want my money, file out whatever with the time they think its worth to be profitable with their staff, and too bad so sad whatever happens to you happens.

I will keep looking until i find the one that will take the time and attention and gives me good service. Anything less than that I refuse. Just like any other professional. You dont call a plumber that gives you attitude, does a lousy job, then leaves you with a huge bill you cant afford. That plumber can do their sh*ty work somewhere else!

Edit: And old thread on this month-to-month issue and matrix here notice the members complaining about how the sh*ty lawyer was the one that put the landlord on notice when not necessary. Sorry, i dont give a free pass to anyone that charges high rates and has the arrogance to tell me the internet is full of misinformation when they themselves are giving me bad information!

Edit2: Info on this centers around putting the security deposit as an asset, but not informing the landlord on matrix as they are not a creditor after the one year lease went to month to month (in california)

Edit3: As usual you are correct.

[Zombie13]

Once you file, it won't be stressful. Other than finding my soulmate, the day that I walked out of the courthouse having just filed my Chapter 13, I was walking on cloud nine. People could see that I was happy, despite the $20 in my pocket and the $18 that I'd have to spend to get back home.

Oh Wow LOL!!! Suuuuuure... won't be stressful my *** hahahah! I'll just leave this right here.
I am just ribbin ya.
In all seriousness, for us, the stress never went away. But our posts from the last 5 years can speak for that. Just sayin.
That said though, I am glad you were relieved.
Also, I am glad we are done, and the stress is going away kinda sorta. Gradually. Maybe. I think we both may have PTSD but, we'll see.

[Zombie13]

Ah, I should add, and should've noticed, this was in the Ch. 7 forum, not Ch. 13. So yes, I can understand how it would be less stressful once the Ch. 7 is filed.

[justbroke]

Edit: And old thread on this month-to-month issue and matrix here notice the members complaining about how the sh*ty lawyer was the one that put the landlord on notice when not necessary. Sorry, i dont give a free pass to anyone that charges high rates and has the arrogance to tell me the internet is full of misinformation when they themselves are giving me bad information!

The Internet *is* full of misinformation. Mine, actually, could be a.) dated, or b.) not apply in your district. Since you have so many concerns, it's better handled by someone practicing in California (I don't practice anywhere and I'm not an attorney). California has some good Pro Bono clinics there... they can also help you complete the forms or actually represent you.

Edit2: Info on this centers around putting the security deposit as an asset, but not informing the landlord on matrix as they are not a creditor after the one year lease went to month to month (in california)

In practice, unless you owe the landlord money or you have an unexpired lease, the landlord is not placed on the mailing matrix. This is the practice since you can't reject/assume an expired lease, and if you owe no money, they are not a creditor. That's why that happens. The security deposit is an asset.

Edit3: As usual you are correct.

Maybe, maybe. I know everyone hates this answer, but how your forms are completed are an individual thing. So the answer is always... it depends. It depends on the circumstances surrounding the individual debtor's issues. If you had an unexpired lease, you must list the lease on Schedule G and assume or reject the lease. If you owe the landlord money that would go on Schedule F (Unsecured Creditors). In either of those cases, the landlord goes on the Mailing Matrix.

[bornfree2]

justbroke thanks. i think i understand things better the way you framed them.

[bornfree2]

[*]Lease agreements re not "automatically" severed. The fact that you're on a month to month means that there is no unexpired executory contract in force. (A lease it a type of executory contract.) So long as you're not stiffing the landlord, you can continue to use the month-to-month until such time as a.) you no longer want tenancy, or b.) the landlord no longer wants your tenancy, and you both follow the terms of the lease regarding notification.
I keep saying this, but you are overthinking this. One should always worry about income stability, shelter (an enforceable and unexpired lease), and their well being.

So im reading the official instructions for Schedule G (p 26) and it says:

"You must list all agreements that may be executory contracts or unexpired leases, even if they are listed on Schedule A/B: Property ... including the following:

- Residential leases (for example, a rental agreement for a place where you live or vacation, even if it is only a verbal or month-to-month agreement)

So this tells me I must list the landlord even if I am on month-to-month. Though I dont owe any back rent, do they also get listed in the matrix? (im hoping not so waters are not stirred)..

oy vey..

[justbroke]

Because you keep tinkering with this, I really really want you to go to a Pro Bono / Pro Se clinic and have someone walk you through this. Sometimes it's a term of art. Is an "expired lease" the same as a verbal or something that was originally a month-to-month lease? This is where a local attorney earns their pay by knowing local practice. For example, it is sometimes practice to list on Schedule G but not on the mailing matrix for an expired lease. It may also be practice to sometimes not list it at all. These are legal questions that I cannot answer.