Converting a 13 to a 7

[Ihatebk]

Well, I filled a chapter 13 and paid the trustee for two years. Then I got laid off and my wife got laid off too. She has since got another job and I get some part time work as a sub-contractor, but we did not make enough to pay our mortgage and chapter 13 trustee. Now we just asked the court to dismiss the 13 on March 15. The dismissal was approved, so now all the creditors are calling again and the bank file a Notice of Defualt on our house and will foreclose on it on June 10.

So now we just filled chapter 7. We only make about $25k a year combined.

Since they are going to foreclose on our home on June 10, we were thinking about selling some of our stuff and buying an used travel trailer to live in, but my attorney tells me we can't sell anything and save up any cash. So how am I supposed to save money or gather money for a travel trailer or deposit on a cheap apartment? It looks to me like they want me on the street for a few months until they get around to discharging so I can sell a few things to scrape up money to live on.

What are your thoughts? I am new here....

[justbroke]

They are going to foreclose on your home that fast? Wow. I don't know how that happens so fast if you just asked to dismiss on 3/15/2011 and it's only 4/17/2011. I mean, for Idaho, that seems really fast to go from just getting a Notice of Default (NOD) and being foreclosed in 2 months. Just seems really really fast. Are you sure? Have they "sued" for foreclosure or otherwise filed to exercise their "Power of Sale" clause -- if it's a deed of trust?

Just seems fast.

As for your question, it's simply no. They don't care that you haven't saved money.

Thinking about you re-filing... that started a new "stay". Did your attorney mention anything? I don't see how the bank can foreclose at all given the new Chapter 7. I would talk to the attorney and see what is actually what!

[Ihatebk]

The bank got a release of stay from our chapter 13 because we could not make the mortgage payments and trustee payments. Last payment we made was last July on the house. After they filed the NOD we said what the heck, lets go chapter 7. So my attorney filled for us to be voluntary release from the 13 and after that was approved he filed chapter 7. He tells us the stay from the chapter 13 bankruptcy stays in effect even though we filed a chapter 7 now....

[justbroke]

He tells us the stay from the chapter 13 bankruptcy stays in effect even though we filed a chapter 7 now....

Maybe a little misunderstanding, but the automatic stay ended when your Chapter 13 was dismissed. A "new" automatic stay was put in place in the Chapter 7. In many cases, the creditor can refile the automatic stay and have it granted... because generally they don't like people dismissing and refiling just to abuse the stay! (That's why "serial" filers need to file the so-called "first day motions"; asking the court to enforce the stay.)

[IamOld]

Maybe a little misunderstanding, but the automatic stay ended when your Chapter 13 was dismissed. A "new" automatic stay was put in place in the Chapter 7. In many cases, the creditor can refile the automatic stay and have it granted... because generally they don't like people dismissing and refiling just to abuse the stay! (That's why "serial" filers need to file the so-called "first day motions"; asking the court to enforce the stay.)

BUT would that apply why you CONVERT instead of dismiss? In other words, if have a 13, then make a motion to convert to a 7 - WITHOUT it being dismissed???

[justbroke]

BUT would that apply why you CONVERT instead of dismiss? In other words, if have a 13, then make a motion to convert to a 7 - WITHOUT it being dismissed???

A "conversion" doesn't create a "new" automatic stay. Any relief from stay (RFS) motions that were already heard, remain! That's why I believe that, the way you state that your attorney explained it, was more like a "conversion" description of what happens.

The "new" automatic stay is such an issue with "dismissed and refiled" cases, that many Judges will hold the order discharging the case, whenever they feel that the debtor is trying to abuse a "new" automatic stay in order to stop an RFS action by a creditor! I have read Chapter 13 dismissal cases where the Judges have held the actual dismissal for 6 months in order to allow the creditor to foreclose!

[IamOld]

A "conversion" doesn't create a "new" automatic stay. Any relief from stay (RFS) motions that were already heard, remain! That's why I believe that, the way you state that your attorney explained it, was more like a "conversion" description of what happens.

The "new" automatic stay is such an issue with "dismissed and refiled" cases, that many Judges will hold the order discharging the case, whenever they feel that the debtor is trying to abuse a "new" automatic stay in order to stop an RFS action by a creditor! I have read Chapter 13 dismissal cases where the Judges have held the actual dismissal for 6 months in order to allow the creditor to foreclose!

Wow - what if, justbroke, there is no foreclosure issue - payments are being made to trustee, just income declined due to job change...in other words, Ch 13 still being followed to the letter, BUT conversion is asked for because income declined significantly...?

[Ihatebk]

I got an "Order of Dismisal" from the chapter 13 on 3/8/2011. The lawyer told me, that in Idaho the NOD would stay on the property because they ask for relief from the stay on the 13. He said if they don't know Idaho law it may confuse them and I may get to stay in the home a little longer, but he doubts it. Anyway the way it stands now is that I have a NOD for June 10 at 11:00 am. My chapter 7 file date was April 15, 2007 (last friday). The 341 date is May 19 and the final close date is estimated to be July 18,2011.

So back to my original question. If you are not allowed to stash money and you cannot buy anything of value until it is closed, how do you save money for deposits and rent. (What I would really like to do is stash money and buy a pick and travel trailer and move around to where there is work, but looks like that is against the law). So what can I do legally so I won't be living on the street with my wife from June 10 ~ July 18.

If I could sell all my stuff small stuff like tools and such I could probably stash $3000 for an RV and $8000 for a truck.

[justbroke]

If you are current on your payments in a Chapter 13, there's no reason for the lender to foreclose. However, if you were in arrears and convert to a Chapter 7, it is very likely that the lender will file an RFS motion in the "converted" Chapter 7 case. That's exactly what happened to me. I had arrears on my investment property that I was first giving up, then keeping. The Chapter 13 didn't satisfy all the arrears. Upon conversion, the lender immediately filed an RFS!

They then offered me a modification, but... funny thing... still had the RFS motion in play! SO much so, that I had already executed the modification. I went into court to defend the RFS and the judge basically tells me that being current (via modification or payment) is not a defense to an RFS motion since a Chapter 7 does not allow the debtor to declare that the property is "necessary for the reorganization of the debtor".

I think my case (Chapter 13 and Chapter 7 via conversion) touched on almost every litigation area there was! (Including an adversary proceeding that I initiated!)

[Ihatebk]

So back to my original question. If you are not allowed to stash money and you cannot buy anything of value until it is closed, how do you save money for deposits and rent. (What I would really like to do is stash money and buy a pick and travel trailer and move around to where there is work, but looks like that is against the law). So what can I do legally so I won't be living on the street with my wife from June 10 ~ July 18.

If I could sell all my stuff small stuff like tools and such I could probably stash $3000 for an RV and $8000 for a truck.

[keepsmiling]

Do you have to write the tt to ask to sell your stuff? Is there a homestead exemption amount that you can use?

[momofthree]

You've already filed your ch.7, you should be able to save money now. You just can't save it before you file unless you can exempt all the cash on hand....Either you're confused or I am, lol.

[Ihatebk]

momofthree, I am just hearing so many different stories on when you can stash cash away and when you can't, so I really don't know. Bottom line is I am living in my home and will get booted out of that on June 10. All I am paying for is utilities, gas for one old car and food. I have a lot of things that are worth $5 ~ $50 at a garage sale. I figure I can get around $10,000 grand saved up to buy a $5000 travel trailer and a $3000 pick up to tow it with. Problem is that some people tell me if I buy a $5000 trailer that it is not exempt in Idaho and a $3000 pickup + my jeep that is worth $3000 will put me over the $5000 car exeption.

So my problem is I would like a paid off trailer and paid off truck when my BK is final. The 341 is on May 19 and the final day for creditors to protest is July 20. I get booted out of my house. So my questions to all of you smart people on here is to help this dummy figure out when I can sell my stuff to save up the $10k and when can I buy the truck an trailer?????

Please help, and I apologize for not being clear on this. I am trying to say it as clear as I can...

[justbroke]

momofthree, I am just hearing so many different stories on when you can stash cash away and when you can't, so I really don't know.

You should always come here to BKForum and we'll tell you either we don't know, aren't sure, that it's District specific, or the bottom line. The bottom line is this. If you had converted your case, any money that you "saved" during the Chapter 13 is NOT property of the bankruptcy estate, in the converted Chapter 7. When you dismiss and refile, you create a "new" bankruptcy estate consisting of all your non-exempt property.

Bottom line is I am living in my home and will get booted out of that on June 10.

Are you sure? Is your attorney sure? A "new" case starts a "new" automatic stay. Additionally, the process in "some" States is that a foreclosure action must be restarted. This is entirely a district and underlying State non-bankruptcy law issue.

I figure I can get around $10,000 grand saved up to buy a $5000 travel trailer and a $3000 pick up to tow it with.

I think this may be your problem. You are trying to save a lot to move into a new homestead (and own it outright). Is it possible to rent (real cheap) for some time and save some more?

Problem is that some people tell me if I buy a $5000 trailer that it is not exempt in Idaho and a $3000 pickup + my jeep that is worth $3000 will put me over the $5000 car exeption.

If you buy it post-petition, it's not property of the bankruptcy estate... unless you dismiss again and re-file again. Who are these people?

So my problem is I would like a paid off trailer and paid off truck when my BK is final.

That is extremely ambitious and something that I wouldn't recommend. I recommend baby steps. If you can save $10K, I'd rather see you renting for $500/month for a year or two, and keeping a nice "savings" so that when a real emergency comes, you'll be prepared.

The 341 is on May 19 and the final day for creditors to protest is July 20. I get booted out of my house. So my questions to all of you smart people on here is to help this dummy figure out when I can sell my stuff to save up the $10k and when can I buy the truck an trailer?????

I would wait until after May 19th and definitely talk to my attorney. You want to be sure that the exemptions are good to go. You also don't want to spend the money and then have the Trustee want the proceeds. This is just smart bankruptcy.

I think you're just a little to anxious to get this over with. We have all been there, especially we Chapter 13 debtors. However, it's not a race.