Need Help - Have to refile and being sued

[98daffodils]

Hi everyone! So I have a dilemma, and I’m trying to figure out the best thing to do. It’s been on my mind quite a bit, and in fact, the only positive thing is that I’ve been able to lose weight because I don’t have much of an appetite.


I was a person who always paid the bills, but unfortunately, my divorce left me with absolutely nothing. I began to rack up my cards in order to provide for myself and my kids. Everything spiraled out of control and I could only keep up with half of my payments, most of those being things like my student loans, Car and rent and a few of the credit cards.

Then, in 2021 I was sued by a junk debt buyer who bought one of my past due credit card accounts. Realizing that I was behind on numerous other things, and now had this suit brought against me, I knew I had to file for bankruptcy. Unfortunately, I have two jobs and with them together I was above the chapter 7 median for my area, (in hindsight, the attorney I had at the time didn’t do me any service because she didn’t factor in correctly the alimony I have to pay my ex-husband—as it fluctuates month-to-month based on expenses and the average she took was about $700 to $800 off what it is for most of the year).

Also, for the second job I have, I am only paid eight months out of the year so for the four months that I don’t receive a paycheck from that job life was very hard to sustain the Ch13.

I got where I was not able to pay my ex-husband so he started threatening me with legal action and then on top of it , I was doing without food so that my kids would have what they needed. I asked my attorney to convert my 13 to a seven and she said I would not qualify. I asked her then to file a motion to move my payments for six months, postpone or whatever she could do so that I can do something to get on my feet. She told me that she could help me but that she would need a $2000 retainer which, of course I didn’t have that.

Ultimately, she said that she could voluntarily dismiss my case, and that most of my creditors probably wouldn’t come after me anyway because the debt was so old. Told me to take the months after the dismissal to save up money that way I could prepare to file again if I needed to.

Well, it’s been about eight months since the dismissal and I started to think there’s no guarantee none of these people will leave me alone, and I would much rather have the peace of mind knowing that things were properly handled. I was able to get caught up with my ex-husband, so I began to save in order to file again.

Found a new attorney who acknowledged I am over the chapter 7 median, but also pointed out that my medical expenses, child care expenses, and alimony expenses qualify me for a seven.

A few days after this I get a summons in the mail. Now let me just say I find it weird that I was served in the mail and not in person. In Virginia we call those warrants in debt and I received this one for $1800, for a medical debt. The reason I didn’t pay this one originally is it was incurred while I was in the chapter 13, so the creditor would not accept any payments from me except voluntary ones.

After the dismissal, I set up a payment plan with them, but they canceled it and said that I did not qualify and that the total amount was due. After that, I received a letter saying they turned it over to a collection agency and heard nothing else. Then I received the notice of suit from their attorney. I’m not quite sure how it got from the collection agency to the attorney, but it did.

I immediately contacted my new bankruptcy attorney, and he told me that since I just quit my second job (it was causing me to owe high federal taxes each year and my kids’ schedules don’t allow for it) that I would need to wait a couple of months before I can file in order to get the seven, because otherwise it would have to be 13 since both jobs would be counted if I file now. The problem with waiting is now I have the suit….. I mentioned it to my attorney, who said the firm would go to the hearing on my behalf and ask for a trial. I suggested that since I have to wait to file, why don’t I just pay the medical debt off and avoid the hearing and trial setting altogether? I also don’t understand why I can’t just go ahead and file for the seven because I no longer have that job and can prove it. I don’t see how the income can be counted when it is no longer an income for me.

The other thing concerning me is that this is the second time I would be filing and it’s under a year. My attorney assured me that we can ask for an extension of the automatic stay, but I don’t know how those work. My 13 was voluntarily dismissed after a year, and it was dismissed without any prejudice against me. I just don’t know if it’s best to wait to file and attempt to get a trial for the suit - or just pay them off and get the suit dropped…. or do I try and file before the suit?

Thank you guys for any advice 😊

[justbroke]

Paying off that medical debt just before filing, would likely entice the (Chapter 7) Trustee to claw it back. In other words, making preferential payments to a particular creditor is something they look to correct.

As for whether you could actually get to trial, it depends on how much paper they push. They could move for summary judgment based on your answers to their questions (all on paper). In other words, it make not make it to trial because you'll likely say or do something that validates the debt.

I don't know how fast they could a.) get a judgment, b.) execute a judgment, or c.) convert the judgment to a lien. I would hope that your BK attorney could have more (local) information in that regard. Of course my thought would be to try to file the bankruptcy ASAP and get that suit stopped in its tracks.

[98daffodils]

justbroke -Thank you so much! I’m going to write my attorney today because I don’t understand why we have to wait in order to get the seven. I know he’s afraid they’ll try and count the second job since I recently stopped working there, and if they count it I don’t qualify for the seven because my income is above the median—- my income is above the median with just my regular full-time job in the first place, but with my expenses, and not having the second part time job, it squeezes me into the seven. However, if I could provide a letter stating I no longer work there from that job- I don’t know why that wouldn’t suffice? I don’t really think it’s wise either to wait. I agree with you that we should just file immediately —the other thing I’m wondering about it since I filed before I would have to ask for an extension of the automatic stay— Otherwise, the filing wouldn’t stop the suit right?

[justbroke]

Your attorney wants to wait because your 6-month income lookback is expected to be too high. If you filed today, your lookback would be October, November, December, January, February, and March. That is likely causing all your income from the 2nd job to be included and pushing you over the median-income for your area. I'm thinking that your attorney wants most of that income to roll off. I don't think a letter will work.

The filing won't "automatically" stop the suit, but your bankruptcy attorney might file a "suggestion of bankruptcy" after you file. Many times, the creditor will pause the suit when the bankruptcy is filed, and drop it after the discharge.

[98daffodils]

I think that's exactly what he is doing... by waiting until July to file it would mean only 4 out of the last 6 months would have money from the 2nd job. He is still adamant about asking for a trial on the suit, which makes me very nervous. I am wondering if its a good idea to just file now to stop the suit (ask for an extension of the automatic stay when I file so that happens) and then covert the Ch 13 I would get now into a 7?

[justbroke]

Conversion from a Chapter 13 to a Chapter 7 is not guaranteed. In some States, you must have qualified for the Chapter 7 at the time you filed the Chapter 13. In nearly all cases, conversion requires significant change which you will not have (your financial circumstances would not have actually changed).

He's hoping that by asking for a trial, it pushes out the date beyond the filing date of the bankruptcy.