Chapter 7 Asset Case

[originalhealer]

Background: I went to my 341 meeting on Wed, Aug 17, with the full expectation that my case was a no-asset case. To my surprise, the Trustee wants to take what is left of my inherited pension and claim it as an asset.

In the beginning, I was dead-set against this. After some thought, I was reluctant but weighing my options, and now, I think it actually may be a good idea.

Originally, I was viewing it as, "this guy is just going to take my money". But now, I realize that he will take most of it to pay off my debts, and keep a commission for himself.

I have some questions, if anyone knows:

1. The amount left in the pension is approximately $37,000.00. How much commission does the Trustee get?

2. If he is going to use it to pay off my debts, which debts will he pay first, and in what order?

I listed ALL my debts, even though my student loans are not past due and are in fact on an in-school deferment. I am only going to list the other debts here:
a. Approx $950 to the IRS
b. Approx $350 to State Tax Commissioner
c. Approx $650 in parking tickets (judgment)
d. Approx $3,250 for an auto that I no longer possess (judgment).
e. Approx $3,200 to my apartment complex (eviction)
f. Approx $1,500 to the moving company for past due storage (secured)
g. Approx $8,800 for my current vehicle (secured), NOT past due.
h. Approx $250 for jewelry in the pawn shop (secured)
i. Approx $20,000 in medical bills
j. Approx $4,400 in credit card, retail and catalog shopping debt.
k. Approx $1,700.00 to old closed bank accounts
l. Approx $3,600.00 in old utility, cable, telephone and cellular phone bills.
m.Approx $800.00 in other miscellaneous debts.

3. Doesn't each creditor have to file a Proof of Claim in order to get paid?

Thanks

[HHM]

When the trustee designates a case an asset case, a notice goes out to all creditors to file a proof of claim and they must do so by a certain date. The trustee will only pay those claims for which a proof of claim is filed. debts are ranked by certain priority, adminstrative claims, secured claims, unsecured priority claims, general unsecured claims, etc.

If no proof of claim is filed, those debts do not get paid and they are discharged.

[Tatetytiffany]

Whose is worse banks or lawyers.

Trustee gets a fee of $60 no matter what happens. If he can find assests in a chapter 7 is receives (now get this) 25% of the first $5000. So it pays him big to find any amount of assets. The trustee also receives 10% on the next $45000. I am sure a bunch of lawyers were involved when these rules were put in place. When I filed I went through all the cases that were listed on the website of the bankruptcy court. I counted the times each Trustee objected to anything involved in a chapter 7. I hired him as my attorney. We will see soon if this was a good strategy. 341 on Sept 2. Good luck to all.

[originalhealer]

So, doing the math, he gets $60 + $1,250 + $3,200 = $4,510!!!

Which leaves about $32,490 for my creditors.

I saw on another forum that the secured creditors don't get paid out of the assets because they are secured. Also, the non-dischargeable debts don't get paid because they are non-dischargeable. But I don't know how true that is because the tax debts are also non-dischargeable, and you better believe that they will get paid first.

[Whittio]

This is a weird case, I am very interested to find out how it turns out. As you have mentioned before, (which you really should stick to one thread, so people can look back at your older posts, it makes it easier to follow your case) but as you said, this is your income, you have listed it as income, I know they can garnish your 'wages' but only if you have disposable income after your monthly expenses. This is not the case here right?

Also, how can they collect this as an "ASSET" it's not in your hands, you can't get to it, so how will they? It's not like a boat they can sell to use the funds to pay the creditors off. Maybe they can garnish your income from it, but then will you have enough to live on?

I have understood your posts, and what you think, but also others have brought up interesting facts too, guess you just have to wait and see what the trustee says??

[originalhealer]

The thing is, I have a job now (got it after my filing date), though low-paying. The job I currently have is NOT enough money to live on, even though I have down-sized to a much cheaper apartment. I NEED the pension to put with my income to make it, until I get a teaching position. A teaching position in my city will start me at $43,000. Currently, I make $19,000. That is NOT enough money, even with down-sizing. I got the cheapest apartment I could find, which is only $595 per month. But with a take-home pay of about $1100 per month, then, by the time I pay rent, water, sewage, electricity and phone, I won't have enough money to make my car payment and auto insurance, much less buy groceries, put gas in the car, and other expenses everyone has.

I filed bankruptcy for a reason. If they take the pension, I won't be able to make it. I even considered giving up having a car, but the apartment I was able to find is 20 miles from my new job. I found out that I could take public transportation, but I would first have to walk over a mile, then take two buses, then take a train, then take another bus to get to work. It would take me over two and one-half hours each way. I also asked if any of my co-workers live in my area, but none of them do. I considered trying to find an apartment closer to my job, but with a pending eviction and an open bankruptcy on my record, I was lucky to get the apartment that I got. And I had to pay an extra deposit for that one, and I don't think I'll get it back because they have been holding the apartment for me for two weeks now.

[HHM]

So, doing the math, he gets $60 + $1,250 + $3,200 = $4,510!!!

Which leaves about $32,490 for my creditors.

I saw on another forum that the secured creditors don't get paid out of the assets because they are secured. Also, the non-dischargeable debts don't get paid because they are non-dischargeable. But I don't know how true that is because the tax debts are also non-dischargeable, and you better believe that they will get paid first.

Most of what you said is true. Secured claims do not get paid and non-dischargeable debts do not get paid. The tax issue is a little tricky. Income taxes are considered unsecured priority and those do get paid. I don't recall how property taxes are treated exactly, but you may be able to get them paid by the trustee if in fact he does get an asset.

A little known procedure in BK, is that you, as the debtor, have the right to file a proof of claim for a secured creditor.

[originalhealer]

What would be the benefit of me filing a proof of claim on a secured creditor? So that the Trustee will pay it?

[HHM]

What would be the benefit of me filing a proof of claim on a secured creditor? So that the Trustee will pay it?

Its used more in Chapter 13 cases, so I am not sure its a benefit in a chapter 7. But, if you want your property taxes paid in the Chapter7, you may want to look into the issue a little more.

[originalhealer]

To bring you all up-to-date:
I contacted the office that handles my state pension today. They said the Trustee CANNOT get the pension in one lump sum. He CAN get a court order to put a lien on it, though. Which could mean that he could, let's say, have $1,000.00 garnished from my check every month.

But, I am in a Chapter 7, not a Chapter 13. I have about 31 more months of payments. Is he going to handle my case for almost three more years? I am curious to see what he is going to do.

I contacted the pension office because he sent me a copy of this ominous-sounding letter that he wrote to the pension office to try to get them to give up the pension funds. But like I said, they said what I thought they would, he cannot get them in one lump sum.

More follow-up: I have since moved into my new apartment so the eviction/motion for relief from the auto stay for the apartment is done. The car I am still driving and may have to reaffirm because in my state they will not let me just "pay and drive". I tried being without a car for a few days this week and it was HELL! My new apartment is nearly two miles from the nearest bus stop. It cost me $25.00 to take a cab just part of the way to work. Yes, gas is expensive, but it isn't but maybe 25.00 per WEEK. I have no choice but to hang onto the car a little longer.

[Minnymouth]

VERY INTERESTING CHAPTER 7 - Keep us posted........

If the trustee does not close your case within a certain amount of time - the judge will order a status hearing on him......

Chapter 7's are supposed to be closed as soon as possible.....

Minny

[originalhealer]

I know he has until about September 19 to file some type of motion or something, but I am not exactly sure what that is all about. Right now, he still has to wait to hear from the pension office, which of course they will tell him the same thing they told me today, that he cannot get a lump sum from them. He also has to get a court order to garnish my wages. I don't think he will have enough time, but you never know.

[Whittio]

This just gets more and more interesting. I didn't think they could take what you don't have! And your pension is your income, if your pension and your income is what you live off of, to pay your expenses, how can they leave you with no money to live on??

[Pinktiger]

How can they take a pension??? In Missouri, state employee pensions are exempt. But even if they weren't, I'm not retired yet, and I don't get any money from a pension, so how can they take something that isn't there?

[HHM]

This just gets more and more interesting. I didn't think they could take what you don't have! And your pension is your income, if your pension and your income is what you live off of, to pay your expenses, how can they leave you with no money to live on??

The issue here is that its not "his/her pension". Originalhealer is receiving a pension that his/her mother earned. Most pension exemptions are narrowly written and only allow the direct beneficiary (i.e. the person who earned the pension) to exempt the pension benefits, but subsequent beneficiaries usually don't get the exemption. Thus, that is why originalhealer is in this perdicament.