51% business debt - no means test?

[DontCoSign]

Hi,

In 2004 I cosigned on 11 lots totaling 700,000.00. The market collapsed, the primary on the loan went bk and the bank has just filed a motion for "Foreclosure and Summary Judgment" leaving me with a 700,000.00 debt.

Considering bk I believed that I earned too much for a chapter 7 - the medium income in my area is 48k, between my wife and I we earn 125k. However I today found that I do not have to pass a means test for chapter 7 if more than 51% of my debt was from unsecured business debt. How does this work?

I owe 125k on my house, 25k on a second, 70 in credit card debt and shortly 700,000.00 in a judgment. Around 950,000.00.

My bills are current.

Will I loose my house etc.. if I file chapter 7? Will I be required to pay the current debt I owe?

I just don't get this.

[chicagoannie]

Hi - an expert will answer your questions soon, I am sure. In the meantime, wow - I admire how calmly you posted. If I ever got hit with a $700K judgment...well, someone would be calling me an ambulance!
dontcosign is superb advice.

[HHM]

That is basically correct, however, once the foreclosure goes through, you will owe significantly less because all that will be left is the deficiency. So, you are better off filing BEFORE the foreclosure is final so you can guarantee that your non-consumer debt is more than your consumer debt.

If non-consumer debt is more than consumer, you skip the means test and go straight to chapter 7 discharge.

[DontCoSign]

Hi - an expert will answer your questions soon, I am sure. In the meantime, wow - I admire how calmly you posted. If I ever got hit with a $700K judgment...well, someone would be calling me an ambulance!
dontcosign is superb advice.

Thanks, my view is that money and credit are simply tools - something that we use, not who we are. There is nothing I can do to change the facts that I made some poor decisions thus no need to worry, rather Ive learned a good lesson or two and its time to move past this.

The process however is confusing and with all my heart I desire clarification.

[DontCoSign]

That is basically correct, however, once the foreclosure goes through, you will owe significantly less because all that will be left is the deficiency. So, you are better off filing BEFORE the foreclosure is final so you can guarantee that your non-consumer debt is more than your consumer debt.

If non-consumer debt is more than consumer, you skip the means test and go straight to chapter 7 discharge.

Thank you very much for your prompt reply to my post.

Do I understand the discharge process correctly?

1) My Lawyer advises me on nuance - forms, paperwork etc, and then files.
2) The Court issues a discharge providing the information that the discharge was based on is accurate.
3) My assets are appraised and perhaps sold, the proceeds distributed among my creditors.
4) My house will be returned to the bank.
5) I am then standing on the corner with my clothing in a paper bag owing no one aside my lawyer anything?

I feel like I'm missing something here.

[DebtEnder]

1. Lawyer should go over all the details, confirm your a non-consumer chapter 7 candidate, from my understanding you are. This is a good thing
2. Assuming no issues this is correct.
3. Assets that are not able to be exempted could be liquidated. AS an FYI the Panel Trustee is not looking for your 10 year old furniture or really anything "used" If you have a 50' Yacht fully paid for, 100k in stocks, Tax refund coming in etc etc then he may want to talk with you.
4. Why would your house be returned, unless you WANT to get rid of your house then there is no worry. Florida has a VERY good exemption, ie 100% if I recall. As such even if your house is worth 500k and only owe the 150k you still can keep the house. Now if the house is say worth only 100k, needs work, etc etc and you could perhaps rent for far less then you pay mortgage now could be a good time to get out from it. Your in control in that respect.
5. Your lawyer is paid before you file in a CH7 so unless you have back taxes less then 3 years old, domestic obligations such as alimony/child support and/or student loans then yes you owe nothing to anyone. If you want to stand in a corner wearing a barrel for the novelty of it that is your choice

[IOEveryone]

I’m going through something similar. In short, my last business (stick and mortar) went under. I found a new job and was told by an attorney at the time that I made too much to file for a Chapter 7 as they review your last six months of earnings. The advice given was, if you ever make under that median income (like being unemployed), file for a Ch. 7.

I’ve unfortunately become unemployed and my six months will mature the end of February. As I begin to interview for an attorney, through this forum I’ve learned of the non-consumer debt option. From what I can tell through online research, you do not need to meet any income requirements nor labor through the Means Test. Okay.

Questions:
1. In the state of Washington, I have the option of following either my state or federal exemption guidelines. Are these still in play? I want to ensure there is not a third set of guidelines I should be following.

2. Although you no longer need to be concerned with the median income qualifier, will it harm me if I take a job tomorrow (hypothetically) as opposed to having filed unemployed in 5 weeks?

3. Thinking ahead, is this documented / filed as a Chapter 7 Non-Consumer or simply a Ch. 7? I’m wondering if this comes up on your credit any differently when I’m looking to buy my next home / car ???? Will anyone view this differently because this is business debt and not reckless abandon?

Thanks!

[SunshineGal]

Hi DontCoSign,

Spend some time reading through this blog, there is some really good advice in there. It is written by a Florida Attorney and there are two blogs, one for BK, one for asset protection.

http://www.alperlaw.com/

As for the business debt, that is just not my area...hopefully JustBroke will chime in, if not, research some of his posts as he not only got his discharged, he did it pro-se and he's also in Florida.

Good luck and welcome to the forum!

SG