Ch7 might be dismissed!!!!!!!!!!

Why are you surprised the court is questioning a $780/month lease on a Lexus?????

 

Maybe they just want better proof of these payments.

Lots of people try to pad their bills when declaring CH7 so that the trustee won't see any extra cash available

 

With BK reform, the Trustees are trying to see how many folks should be filing a 13 and paying their bills instead of just a 7 which wipes them out.

He may see that you obviously have a high income and may want to convert you to a 13. Dunno, only your attorney can say for sure. If he/she hasn't called you, time for you to call.

BTW, if your atty screwed up, you can sue them. I did - and won.

 

Why did you not include the lease in the bankruptcy? Was the car that important to you?

--Galabar

 

Galabar,

ALL debts must be included in a BK - dischargable or not. That includes student loans and vehicle leases. The trustee must see your budget to agree that you cannot afford your debt load and that is the reason why you must list everything.

And for those so anxious to attack this poster for having a Lexus, remember the breakup of the dotcoms took thousands of VERY well off folks and tossed them onto the unemployment line with little hope of finding a position anywhere near their current level of income.

I am a programmer and after 5 years of near stagnant income, I was laid off. I found a new position at a $8000 cut in annual pay. It is, of course, far better that unemployment! LOL

I was lucky because at the time of my layoff I was not in debt and I had a fantastic severance package. Most folks are not that lucky so give this guy a break!

 

I'm not sure anyone is attacking the poster for having a Lexus. Some of us question the $780/mo price tag and even at that, i don't think anyone has attacked this poster.

 

Re: Ch7 might be dismissed!!!!!!!!!

You really, really need to seek the advice of a different bankruptcy attorney. I simple google search about car leases and bankruptcy was enough to convince me that car leases are DEFINITELY dischargeable in bankrupcty.

When you file for bankruptcy, you need to list ALL your debts.

You need to find out ASAP if you can include this. Get a $2000 car to drive around in (if your ego can take it). I don't advise anyone to file for bankruptcy. However, if you've already done, by gosh, do it right.

By the way, I'm not sure about the 401k debt, but since it does not have to be paid back (you will be treated as having taken an unqualified withdrawl, costing you about 40%), the bankruptcy court may look at it differently (although, I really have no idea about this).

--Galabar

p.s. If you do have a large income, you should be attemptint to pay off at least some of your debts, shouldn't you. Wouldn't a Chapter 13 be much more suited to your situation?

 

Re: Re: Ch7 might be dismissed!!!!!

SCMomof5,

I wasn't attacking. Just pointing out that a $780 lease on a vehicle seemed excessive for someone in BK (or just about anyone for that matter). The poster mentioned that he did not believe that auto leases were dischargeable, which is incorrect. If this advice can help that individual to get out from under an additional $15,000 worth of debt (the amount upside down in the lease), then I think it will have been a valuable post.

--Galabar

 

Galabar,

You are right.

 

Re: Re: Ch7 might be dismissed!!!!!!!!!!

But you can include it in the bankruptcy, avoid the lease, give back the car and get a cheap clunker for cash like the rest of us do.

Mabe the Trustee has trouble with a Bankrupt driving a Lexus when the Trustee only drives a Lincoln.

 

Re: Re: Ch7 might be dismissed!!!!!

The 401k loan payback is 100% voluntary. The only consequences of not paying it back are that you get hit by taxes and an early withdrawl penalty because the IRS will reclassify it as an early withdrawl. In this case, it certainly benefits you to keep paying the loan back, but it can not effect your credit and, therefore, would seem to not be a legitimate issue in BK.

Given that this loan in no way needs to get paid back, and the only issue with defaulting on it is that you will own additional taxes, what the trustee is saying seems to make some sense. He or she may be thinking "well, yes, you may get penalized by the IRS, but there is no creditor that you owe the 401k money to, and there are creditors that you owe other money to...".

Of course, I am no BK lawyer, but again this loan does not have to be paid back (gosh, did I say that enough )

--Galabar.

 

Re: Re: Ch7 might be dismissed!!!!!

Here is some additional info on the 401k loan thing:

http://www.401k.org/401kloans.asp

--Galabar

 

Re: Re: Ch7 might be dismissed!!!!!

Did you have the option of just returning it. Could you do so now? It seems that it is the real killer in this issue -- try to get rid of it if you can. It is not bringing you any good.

By the way, I'm really interested in how this turns out. Good luck!!!

--Galabar

 

Re: Re: Re: Ch7 might be dismissed!!!!!

The trustee can't force you to alter the terms of your contract with the 401k loan provider.

While it is true that you can save some money every month by not paying the 401k loan, to force you into that situation is not right. There are adverse consequences to that:
1) you will owe tax + penalty for early withdrawal
2) you will have that much less money for retirement.

Why should you be subject to this?
In my opinion, they should not force you to lose part of your retirement.

I don't think the trustee has this in mind, she just wanted to be clear about the terms of the 401k loan (since not everyone has your type of restricted plan)

 

Re: Re: Re: Re: Ch7 might be dismis

It will definitely have adverse consequences for this individual. However, there are many other circumstances that would be similar. For example, if the individual had put down a deposit on a boat, and would lose the deposit if he didn't proceed with the final purchase, this could be considered an adverse condition.

I'm not sure how a BK trustee looks at these two situation. I was only pointing at that a 401k loan does not have to be paid back and there are no credit consequences for defaulting.

--Galabar