Presumption of abuse

[Kingxray]

Hi all,

On a recent thread I had posted that after our 341 I checked Pacer and found that we were flagged MEANSYES, NODISCH. After that the trustee filed a "Statement of presumed abuse". At our 341 my dad's lawyer showed up needled me with questions regarding our means test.

Yesterday we received a letter from our lawyer stating that the US trustee wanted additional documentation by Jan. 21 to avoid dismissal of our case. The trustee is asking for all the things that my dad's lawyer asked me about and a few other things, like homowners policies, and 2 years worth of bank statements. They also want any personal property riders and endorsements. Does anyone know what those are? Are they in our homowners policies?

Anyway does that sound like a good sign or bad one? Can the trustee change our status after she receives this documentation and is satisfied? Any thoughts? Thanks.

[relief13035]

I don't understand a Dad causing problems like this.

[Kingxray]

I know it sucks.

[Help!]

It sounds like you're being asked for similar documentation to what we were asked for. When it was all put together, we had a 3" stack weighing 2.5 lbs. Anyway, a personal property "rider" is an extension of your regular homeowner's insurance, for example, additional coverage for theft. A personal property endorsement is a similar homeowner's insurance add-on that guarantees a set value for certain items so you won't receive a depreciated value for certain property. In short, the UST is asking for copies of all insurance policies and coverages.

The attorney for the UST was not satisfied after we provided the necessary documentation in our case because the UST recalculated our income and expenses on the means test. Getting in the paperwork is the first step, and it shows you have nothing to hide. You have to move quickly and make sure your attorney communicates with the attorney for the UST, though, because the 30 day clock is ticking.

[Kingxray]

Hi Help, How was your New Year?

I am turning in my paperwork tomorrow. Luckily I had most of it and the bank stuff I was able to access online. UST also wanted us to answer some questions, which I did in a letter.

So what happened to your case? Was it dismissed? Where are you at now with your BK?

Nice hearing from you and again thanks for all you helpful advice.

[Help!]

Hi, so far so good!

I'm glad you've got your documentation together. Are you submitting it directly to the UST or is your attorney? I'd follow up on that to make sure the UST attorney has it. I also think within a week of submitting the documentation your attorney should be talking to the UST attorney to get the details on why they feel you don't meet the means test.

After proposing a sort of compromise which would net creditors more repayment than a Ch. 13 plan (by asset liquidation), the UST filed a declination in our case. We were happily discharged about a month later - finally an end to several months of unbearable stress and worry.

You're welcome for the advice - I hope it removes a little of the fear and anxiety in dealing with the UST. There are other success stories out there after presumed abuse, so stay positive.

[Kingxray]

What's a declination? It sounds like you got declined.

That's what I don't get about the UST, we are surrending our first home which has lots of equity that she can sell and give to my dad. The creditor's would receive far less if we went 13.

I also felt a little like she was trying to satisfy my dad's lawyer's questions by making me supply this extra stuff because it was very similar to the questions he asked at the 341, but maybe I'm all wet.

And yes, your advice does soothe my mind during this extremely stressful perioid.

[Help!]

No, a declination is a good thing. It's the UST declining to shoot down your Ch. 7.

The UST, unlike the case trustee, isn't focused on assets. Their primary function is to convert Ch. 7 cases to Ch. 13 wherever possible. They focus mostly on the means test, and to some extent your schedule J.

Keep thinking about the equity in the home your surrendering. In fact, you might want to start putting together a summary that compares the amount available for creditors if the house is liquidated vs. the amount they'd get in a Ch. 13 plan. That might be a good thing to use as leverage if the UST still believes your case should be converted or dismissed. The UST is tasked with ensuring that repayment to creditors is maximized, so the more you have to liquidate the better your chances if documentation alone doesn't persuade them.

[Kingxray]

Thanks Help. I will do those calculations. Don't the creditors get something like 25% over 5 years in chapter 13? I read that on a thread somewhere.

[Help!]

They get 60 payments of whatever disposable monthly income is available for repayment based on schedule J.