non consumer debt & chapter 7

[HighUnder]

Hoffdaddy and dakota 112, any updates? Were you able to successfully complete you Chapter 7?

[hoffdaddy]

Dakota 112

Best of luck on your new journey. Our debt limits are too high for chapter 13. All of our losses and inability to pay stem from the outside businesses we attempted and the associated personal guarantees. We have lost a ton of money in the last 3 years and simply don't have the ability to fund the businesses any more. We do feel fortunate that we will still have income from the medical side. However, as you know that income is down as well. Our medical income is down 50% over the last 4 years. We literally live from paycheck to paycheck and are just looking for a fresh start. Believe me, we will not attempt any more business ventures. We need to get our attorney comfortable with the fact that we feel we are allowed to file 7. Best of luck to you.

[dakota112]

Hi Hoffdaddy: I feel your pain. I also am a physician for over 23 years in Primary Care so I kind of know what you are going through, however my situation is a little different. I was in private practice, high income earner, workin my butt off year after year, only to realize that it was all for nothing these past 5 years as I got deeper into debt , essentially I was borrowing money personally to pay for what my business couldn't bring in due to ever decreasing reimbursement and increasing costs of running the business. My unsecured debt is around 300K, and income now only around 4 K a month and schedule J is -5K due to as you know all the costs associated with maintaining a physicians license, maint of certification, malpractice ins., life ins., auto ins., health ins etc etc. I closed my practice last May (couldn't afford to keep it open with the paltry reimbursement from medicare and medicaid) and work basically as an independent contractor and have applied to go back to college to change careers and obtain an MBA with help from my family over the next 2 to 3 years so the TT cannot say I am gaming the system . I am unable to earn what I used to in primary care, I no longer enjoy it due to all the stress associated with it as well as malpractice fears so I am changing gears. No law says you have to work in a profession you initially chose the rest of your life. That being said, you would have to have a plan, or end up in a CH 13 as a slave to the system for 5 years which I think is unfair considering our leaders are looting our dollars for themselves and no one says a word. I file in a month CH 7 , my lawyer was very confident and has been in this for 25 years so I feel good about it and can't wait to start over. Its tough being a doctor today and you won't get much sympathy from folks who aren't physicians. It has become a thankless profession and for sure if you end up in primary care you will fail.

[hoffdaddy]

Thanks HHM, I will post more info later.... this is the issue I am discussing with my attorney. A lot of the information I can find says Chapter 7 is a tool we should be able to use. However , many say the 350 to 400k in annual income will be an issue. I hope you are right and that Chapter 7 is available as you say. Can you point me to any cases I can show my attorney?

You guys are awesome !!!

[HHM]

While it is true you do not need to take the means test you still have to submit a budget. The problem is if you have any money to pay your creditors you can not do a 7 even if it is a non-consumer case. If you are a high income earner it will be hard to prove you can not pay anything toward your creditors.
While I do not know your specific situation it would be hard to convince me you would not have any money left to pay your creditors if you are making a high income. You are not required to use the IRS standards, however if the amounts are way out of line, this is where the smell test comes in.

You would think so, but that is actually not the case. The case I mentioned above, the couple showed $4000 per month disposable income (even after factoring in all the mortgage payments on the investment properties that were being surrendered), and there was no peep from the UST. Literally ALL the objections related to disposable income are based on section 707; and you can thank the poor legislative drafters for the credit card industry that made so that section 707 simply does not apply to non-consumer cases.

Granted, there is always some risk that if you have DMI in any chapter 7, you may get an objection, but in a non-consumer case, it is less of an issue.

[jribe]

you'll need to post your figures to have anyone give you a clear answer. Income from the last tax year, current income and your expenses - on the expenses it would be helpful to break them down.

then we can tell you what will fly (most likely). Just because "your budget" doesn't have any money -doesn't mean the trustee won't find any

Most will point out that BK requires a lifestyle change. You can't necessarily keep the same lifestyle that you had before BK.

But if you would like detailed guidance - we need more info. Remember no one will know who you are.
There are some people that are new and feel uncomfortable sharing- but we won't know who you are by giving more details on the financial stuff.

Also- please give your state. As you're probably aware, there's exemptions that vary..

good luck

[hoffdaddy]

got it... over the last 4 years our income has dropped 50% and our budget shows little if any discretionary income.Income is still high but goes to house, kids ,school and all the basic stuff. No frills

[myid4u2c]

While it is true you do not need to take the means test you still have to submit a budget. The problem is if you have any money to pay your creditors you can not do a 7 even if it is a non-consumer case. If you are a high income earner it will be hard to prove you can not pay anything toward your creditors.
While I do not know your specific situation it would be hard to convince me you would not have any money left to pay your creditors if you are making a high income. You are not required to use the IRS standards, however if the amounts are way out of line, this is where the smell test comes in.

[hoffdaddy]

yep, I had counted the house as consumer debt. Can you point me to any cases or case law that would allow us to show our judge any precedents.

Thank you so much for all the info. Hope you have a good New Year

[HHM]

Keep in mind, your mortgage counts as consumer debt.

Don't worry, I recently reviewed a case with a lawyer, the Dr. (husband) made over $300,000 per year, but because it was a non-consumer case (due to investment real estate), the chapter 7 was discharged without incident.

[hoffdaddy]

Thanks again.. If the statute says we can file 7 since it is non consumer can the judge still make us go 11

[MSbklawyer]

yes, it is clearly non consumer. If you add the personal guarantees non consumer debt is 3.5. The only consumer debt we have is our home and it has no equity.

I don't see why 7 wouldn't work for you then. Any idea what your schedule I/J is going to look like? I'll defer to your attorney's advice about the smell test, but I'd suggest you get another opinion as well.

[hoffdaddy]

yes, it is clearly non consumer. If you add the personal guarantees non consumer debt is 3.5. The only consumer debt we have is our home and it has no equity.

[MSbklawyer]

all the businesses are LLC's and all have personal guarantees.

thanks for the info

And it's primarily non-consumer debt?

[hoffdaddy]

all the businesses are LLC's and all have personal guarantees.

thanks for the info