Dismissing a Chapter 7 After 341 Meeting

[Dan76]

I have a question and I think I already know the answer to this one. To sum it up I filed BK 7 and inherited property after filing. I know the trustee is going to take it and pay what is owed, but my mom is just thinking I can stop the BK and use that money instead to settle the debt.

I tried telling her it's too late and I'm too far a long already. Also, even if the courts did approve a dismissal, I'll still have the BK on my credit report.

What about converting it into a 13? Is that a possibility, or is it too late? Then again would it be worth it to go into a 13, or just get the Chapter 7 over with at this point. She just doesn't seem to understand, it's not that easy and I can't just stop it.

[despritfreya]

You are correct in your belief that you will not be able to dismiss your case. Unfortunately we cannot really tell you if you should convert to a 13. In the 13 you would still have to pay your creditors the equivalent value of the inheritance, although you could do it over the course of the Plan. You really need to discuss the specifics of your situation with a local attny if you want to "keep control" over the inheritance. Or, like you said, just stick it out and be done with it.

Des.

[Dan76]

You are correct in your belief that you will not be able to dismiss your case. Unfortunately we cannot really tell you if you should convert to a 13. In the 13 you would still have to pay your creditors the equivalent value of the inheritance, although you could do it over the course of the Plan. You really need to discuss the specifics of your situation with a local attny if you want to "keep control" over the inheritance. Or, like you said, just stick it out and be done with it.

Des.

I know that in a 7 you have to pay everything 100%, but I thought in a 13 you pay it back over 3-5 years, and only pay back a portion of what you owe to your creditors. Is that only if that's all you can afford?

[despritfreya]

. . .I thought in a 13 you pay it back over 3-5 years, and only pay back a portion of what you owe to your creditors. Is that only if that's all you can afford?

You are half correct. You pay your unsecured creditors what you can afford to pay OR the value of your non-exempt assets, whichever is greater (assuming you are not paying 100% of what you owe.) If you want to keep the non-exempt assets you must agree to pay the creditors what they would have received if you were liquidated in a Chapter 7.

Des.

[DebtEnder]

The only chance of you being able to keep some of it would be to do a 13 and HOPE the sum total of the amount the creditors claim in the 13 is less then the total of your assets to be liquidated. It is rather common in a 13 for some creditors to not file claims and therefore payout less then expected. However you would still need to payout 100% on any creditors that DO end up filing a claim. It's a risk you'll have to decide on. Depends a lot on what kind of debt you are filing on as well I would think.

[Dan76]

The only chance of you being able to keep some of it would be to do a 13 and HOPE the sum total of the amount the creditors claim in the 13 is less then the total of your assets to be liquidated.

The amount that I am expecting to get when the house is sold, and the amount I owe to creditors is about the same. My attorney pointed out though that many of the creditors would probably not put in a claim for any assets. This is because many of the accounts are under $1000, and the creditor is not going to waste $300 to put in a claim on such a small balance. Also, would the court have to approve the case being turned into a 13, and I believe it's a lot more expensive to file a 13 compared to a 7, right?

[lillymarlene]

I believe that you would have to show the trustee that you are able to fund a chapter 13. Then most 13's seem to be more expensive. I could have paid about $1,800 for a chapter 7, but I paid about $4,000 for my 13. (This did include filing fees, debtor education, and ammending a forgotten creditor.) Then also one advantage of this type of bankruptcy is that maybe your attorney will put 1/2 of his/her fees into the plan.

[frogger]

My attorney pointed out though that many of the creditors would probably not put in a claim for any assets. This is because many of the accounts are under $1000, and the creditor is not going to waste $300 to put in a claim on such a small balance.

$300 to put in a claim? Last I knew (about 5 minutes ago), it didn't cost anything to file a claim, except a few minutes of time and a couple of sheets of paper........

Perhaps your attorney charges $300 to file a claim for someone. If so, they have enough money that $1000 would not mean much to them (unlike most people).

[Dan76]

$300 to put in a claim? Last I knew (about 5 minutes ago), it didn't cost anything to file a claim, except a few minutes of time and a couple of sheets of paper........

So are you saying when a creditor receives a discovery of assets notice from the courts, they don't have to pay any court filing fees to claim the asset? He made it pretty clear to me that this is what happens. Maybe I did not understand him correctly and misheard what he was saying. Could in vary state-to-stat? Maybe in some states you don't have to pay any court filing fees?

[lillymarlene]

$300 to put in a claim? Last I knew (about 5 minutes ago), it didn't cost anything to file a claim, except a few minutes of time and a couple of sheets of paper........

That's all I thought creditors would have to do. Some of my creditors filed claims for amounts under $300.

[Dan76]

I've been doing some searching online and can't find any information regarding court filing fees for a proof of claim. Maybe my lawyer meant to say that if they try and file a proof of claim after the bar date, they will have to pay significant legal fees that would not be worth it for such small balances. That makes more sense, right?

[frogger]

There is no fee for filing a proof of claim. From the point of filing, you have about 120 days to the deadline for filing a proof of claim. If you're a creditor, they normally even send you a proof of claim form with the notification. If not, they are available for free download from the bankruptcy site.

As to filing a proof of claim after the deadline, I don't believe a lawyer is going to try that. They have had 120 days to do so, but who knows? Perhaps some of them would take your $300.00 just to get your money and do a 2 minute filing that might or might not be rejected.

And, a final thought. You're not filing a proof of claim to claim any assets. You're filing a proof to participate in the distribution of the assets.

[DebtEnder]

Well claims are the same way with a 7. If you say have 50k in assets that could be liquidated and 50k in debt. You then exempt say 10k of it. That leaves 40k to go to creditors. Let's say of that only 1/2 of them file. As such TT pays out 25k to those, takes his cut, and the rest you get to keep on top of anything you already exempted.

[Dan76]

Well claims are the same way with a 7. If you say have 50k in assets that could be liquidated and 50k in debt. You then exempt say 10k of it. That leaves 40k to go to creditors. Let's say of that only 1/2 of them file. As such TT pays out 25k to those, takes his cut, and the rest you get to keep on top of anything you already exempted.

So I should be left with something, right? I have about 12K in exemptions. I'm expecting to receive about 40K when the house is sold, and I listed 38K in debt on the petition. So the trustee takes the 40K, subtracts the 12K and then distributes what is left to creditors after taking his 10%. Is this correct?

[DebtEnder]

Not sure of the exact order. I think the TT takes a cut of only monies acquired and then paid to creditors. And yes the court can't just take extra cash and keep it or pay extra just because you have it. If you paid 100% of all valid, in time claims then anything left is yours. Also if all else fails you at least seem to have a sizable exemption so you at least keep that, even if every creditor files claims.