Please Help...I just don't know what to do anymore

[busbis]

I have now went to yet another atty today here in GA. I am surrendering 2 condos, do not qualify for the 7 due to income and no one says I can to a 7 because of the "non consumer" debt because I am still making too much money at the end of my budget. But still everyone is suggesting that I don't even file a 13 on my condos and just let them foreclose. The reasoning of letting them go thru the bk is so I am not responsible for a definency bal. The condos are in FL and every atty will say "I'm not sure how FL's laws are", but I live in GA and I have to file here.

Can anyone please give me reasons as to why I shouldn't file even a 13 to surrender these debts and let them just go into foreclosure. I know that Bk is not the best thing in the world (neither is the foreclosure) but wouldn't help me sleep better at night knowing I am protected under the bk laws? I know alot of this forum is having the same issues with investment property. Are ya'll being told the same thing as I am? I just don't know what to do anymore.

[SinkingFast]

Maybe a couple reasons attnys are telling you not to file is,...........

Once the properties are Sold at Foreclosure, the underlying Security Interest for the mortgages is gone. Any deficiency balance becomes Unsecured Debt. Just as if those notes were CC's.

The Mortgage Lenders on the Condos will stand in line with all your other Unsecureds and get what ever the Trustee decides to give them. Whatever %'age on their claim at whatever interest rate the Trustee decides.

Could be too, with the market the way it is, generally speaking,....... The Lenders may not even come back on you for any deficiency balances. Florida Law does allow for mortgage Lenders to seek deficiency balances, but it does not mean they will. It's a lot of capital expense, legal expenses, with not much certainty of any return on their investment.

You can just let the properties Foreclose, wait and see what happens. If the Lenders come after you, file BK.

[uofaguy]

Busbis -

It appears that I am in the same boat. I had another meeting with a BK attorney today who has a partner that specializes in real estate. At this point, either way I go I am rolling the dice. I can try for a Ch. 7 because the majority of my debt is business (obvious benefits are the ability to move on with our lives quickly w/out having to repay debt like I would in a Ch. 13). The atty is very concerned that we will be dismissed from a Ch. 7 because we will have disposable income - then you are stuck with having the BK on your credit file with no benefit from it. Our attorney says he has not seen a similar case in our state & is pessimistic on our chances. Every atty I've met with but 1 thinks we will get dismissed due to the high income.

Our other option is to wait for the banks to foreclose and see if they pursue a deficiency judgement. If they pursue a judgment, then you can try to negotiate a settlement with the bank, or file Ch. 13 at that point. People in the industry tell me that deficiency judgments are seldom pursued, but who knows. Given my luck, they will pursue a deficiency.

For me it amounts to . . . do I roll the dice on the Ch. 7 being allowed or allow them to foreclose and hope they won't come after me for a deficiency judgment? I have to make a decision soon as I received notice today they are foreclosing in early December.

If anyone has a good strategy, PLEASE let me know.

The attorney today did say that if anyone with high income & a majority of business debt has been successful with a Ch. 7 he would be love to speak with their attorney.

[busbis]

I did have one atty say it was a clever idea to do a 13 pay of early to avoid the definency bal (in hopes that it will not foreclose or sale) to payoff the 13 early ( I plan to w/d about 15K from a 401 to payoff early). If 99.9% of lenders do not go after a definency bal, then why would they file a definency claim or even think about doing so. This way, I am cleared from it and no 1099. The attorney I like the most thought it would go ok, but maybe I liked him because he said what I wanted to hear. Either way, I would rather roll the dice with a 13. I have toomuch disposable income where I would be at 100% claim anyway so if they come after a definency bal than I'm faced with it now then later. The foreclosure will happen regardless so I figure I might as well rol the dice w a 13. I have seen people recover faster from a bk13 than a foreclosure. I'm in the business and see it everyday.

I also want to mention, the attorney's I met w seem to run people in and out of the office....nothing complicated. They seem very surprised that I have done my homework, asked alot of questions and really no what I'm talking about. I take it they don't get that too often so when I challenge what they are saying...they have no interest. As my husband says....they are ambulance chasers!

[uofaguy]

I actually ran your idea of filing a ch. 13 and then paying it off very early by my attorney today. Unfortunately, it won't work for me because my total secured debt (i.e. my primary home mortgage + the investment mortgages exceed the amount of secured debt allowed to file a Ch. 13). Thus, for me to even consider a Ch. 13, I have to let one of the homes foreclose.

My follow-up question to the atty (again, based on your idea) was what if I file a Ch. 13 the day after they foreclose and before they get a deficiency judgement? He said that they could then still include the deficiency judgment in my Ch. 13 and I would have to pay it back. I seem to be in a real bind here.

[busbis]

I really hate to hear that. I'm keeping my fingers crossed that my idea actually works too. Did he give any feedback to you on rather or not had you not been over the limit of a 13 that the plan of early payoff wouldve/shoud work. I'm still unsure of the whole thing, but I plan of actually filing next week or after the Holiday.

[biotechsolution]

tell your attorney to research the following case.

http://www.ca3.uscourts.gov/opinarch/063199p.pdf

specially deals with high income/high expense cases where the debt is non-consumer.

A creditor tried to have the case dismissed for bad faith under 707(a) because the debtors had high income and the ability to repay.

The bankruptcy court disagreed added many more factors to a bad faith dismissal under 707(a), hiding assets, incorrect schedules, false deductions on the schedules, etc. Just having the ability was not enough to dismiss for bad faith udner 707(a).
Even though the debtors had extremely high expenses and some were inflated, it wasn't enough for bad faith dismissal. 707(a) is reserved for 'cause' dismissals.

The bankruptcy court determined that 707(b) was the primary section for dismissal or conversion if the debtors had excess income. Which can't be used for non-consumer cases.

[southernbelle]

Busbis -

For me it amounts to . . . do I roll the dice on the Ch. 7 being allowed or allow them to foreclose and hope they won't come after me for a deficiency judgment? I have to make a decision soon as I received notice today they are foreclosing in early December.

If anyone has a good strategy, PLEASE let me know.

The attorney today did say that if anyone with high income & a majority of business debt has been successful with a Ch. 7 he would be love to speak with their attorney.

I just had a meeting with a great atty. and he specializes in "complicated" BK cases which are mainly non-consumer related. Based on what he told me, I qualify for a Ch. 7 even though my income is above the Median in my state by about $20k. Most of the cases he has filed in which the debt was primarily business debt were successfully filed as Ch. 7. I am current on all of my bills and don't have a mortgage or car to protect. Both fall under the exemptions for my state.

I feel extremely confident in his abilities and he seems to know the BK code like the back of his hand. I don't have any illusions about the possibility of something going awry, but at least having someone to represent me that seems to know what they are talking about will help. Send me a message and I can send you the link to his webpage if you'd like.

Thanks again biotechsolution, you always give the best documentation and sound advice for this type of thing. Your research and posts help to keep me sane.

[uofaguy]

Thank you both Biotechsolution & Southernbelle. I really appreciate your help. Biotechsolution, I sent you a private message yesterday with a related question. Also, where are you finding these types of cases?

Southernbelle - a sent you a private message through this site (I would like to get the name of your attorney or the link to his website), however, your profile is setup so as not to receive private messages. Will you PM me the info? Thanks!

[busbis]

could you private msg me the site too.

[Shaoline]

To uofaguy,

Look into a chapter 11, it deals with your business assets and income and doesn't concern its self as much with personal assets