In March I filed for Ch7 on a Friday as I was out of work for 8 months . I already accepted an offer for a 6 figure job and I was to start the next Monday. My attorney assured me filing was the right thing to do. I went to my 341 and then the US trustee stepped in and is trying to dismiss based on abuse. I owe 70k in credit cards, 57k in student loans and 92k on a house. The US Trustee states I can fund a chapter 13. My attorney says let them dismiss and go back and settle with creditors. 1) This ch7 is on my record forever on intelius.com so I am assuming I cannot remove it and 2) Should I dismiss and settle or do a chapter 13. I am very upset as the US Trustee does not realize I was out of work for 8 months and had a break down and I am sure she does not care.
Let me understand. You were out of work for 8 months, and you are getting a six figure job that you knew about before you filed. If this is the case and your prospective income far exceeds your expenses a Chapter 13 might be best. If Chapter 13 is used conversion to a Chapter 13 is better than a dismissal and refiling. Negotiating the debt is also a possibility but the collectors will want lump sum cash to discount otherwise will expect payment in full by installments. Having had a breakdown makes me worry about setting you loose to negotiate your debts yourself. If I understand the situation correctly Dismissal for abuse is likely. Probably best to deal with the UST for a conversion. Confer with your attorney thoughtfully to chart a proper course.
Robert W GambrellChapter 13 Bankruptcy AttorneyOxford, MS ·
Without a thorough review of your entire financial picture, it would be very difficult for anyone on this board to answer your question. The problem that you appear to have is what is called the 707(b) abuse test which looks at projected income and projected expenses on schedule I & J.
If because of you 8 months out of work, you are a below median debtor, then you would only be required to be in a 3 year chapter 13 plan. A review of what you would have to pay in that three year plan, including what percentage of your unsecured debt would be paid is one factor.
If your means test income put you as an above median debtor, then you must be in a 5 year plan, which will result in payment of more to unsecured creditors and more likely that you would be paying 100% to unsecured claims.
If you have the ability to pay lump sum payments to the credit card creditors, most claims can be settled for substantially less than the amount owed, but there may be tax consequences from the cancellation of debt.
All these are factors that need to be considered, but you and your attorney need to make that decision.
This type of question has become frequent recently -- the timing of a new job and a chapter 7 filing. This has raised all sorts of disputes among us. I think the most salient point is that you admit in your post that you ALREADY had an offer for a 6 FIGURE job before you filed for chapter 7 and you filed literally before you started your new job. So you used your unemployed status to make yourself eligible for a chapter 7 knowing that soon you would be receiving significant income. This has all the makings of a bad faith filing - bankruptcy is based on optics -- if something seems "off", it usually means something is wrong. I can understand why the U.S. Trustee intervened.
Your attorney's advice is to simply try to reach a new deal with individual creditors so that you can avoid being in a 3-5 year chapter 13 case. I hope he/she did tell you that you will be stuck with the student loans and need to settle up if you want to keep the home?
Candidly, I have to wonder about any conversation(s) you had with your attorney regarding the timing of filing a case because the proper time to file the chapter 7 case was MONTHS ago while you were unemployed and before you received a job offer.
The U.S. Trustee is doing her job representing the interests and integrity of the bankruptcy system. She has raised an issue about potential abuse and it is up to you whether you contest her position or dismiss or convert your case. Attributing a lack of compassion by the U.S. Trustee to your situation is simply your attempt to deflect the decision to file your case when you did.
As for your other question, your filing is a matter of public record and will remain that way. Since you are represented by counsel, I will not weigh in on what I would recommend.
Regardless, be happy that you have a new job to look forward to and I hope things will become easier for you. That is the wish of all parties involved in a bankruptcy case, including the U.S. Trustee. Good luck.
