Spouse and I have $2.8M of business debt in our real estate business backed by 4 properties which have a hard money loan that has come due. The properties had appraised at $3.4M earlier but due to market conditions we have been unable to find any buyer. We also have $0.9M in personal debt made up of $400k unsecured debt (used for the business but taken in personal name) and $500k mortgage debt secured by our primary residence. The monthly debt payment across all debt is way higher than our monthly income, our savings are all deleted and with the hard money loan coming due we are thinking of filing for Chapter 7 bankruptcy and giving up all the investment properties. The issue is our combined annual income is high (around 500k) . Based on initial research it seems like we can skip the Cp 7 means test because the business debt is 70-75% or majority of all debt. But is it possible that the trustee will force us to convert from chapter 7 to chapter 11 given our high income? We prefer Chapter 7 because it is quicker and less expensive. Any suggestions or comments from attorneys here who have worked on similar cases? Or from anyone who has dealt with a similar case and a positive or negative outcome on Chapter 7.
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Welcome to the forum.
Based upon what you wrote, it is unlikely that anyone would question your ability to be in a Chapter 7 even if you have "disposable income" when completing a real time budget of your basic living expenses. In situations like yours, several of my clients have had over $4,000 in positive cash flow. Never had a problem with this. Of course, I am not in your State but, I cannot imagine that there would be much of a difference.
Your next step is to discuss your specifics with a well qualified bankruptcy attorney. Since your case will not be a "cookie cutter" case, stay away from bankruptcy mills.
Des.
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