converting ch 13 to 7 ???

[vietnamvet]

What is the name of your state? ga.
almost 3 years ago we filed chapter 13 while living in florida. we moved to ga about 2 yrs ago. prior to filing 13 , we let the court know that there was a law suit pending, but didn't know if it would ever settle. this is why we chose chapter 13 rather than chapter 7. our lawyer said with 13 they may just look at it if it settles, but should not touch it. it wasn't a huge amount...17,000....but large enough. we now have 3 payments left of the 36 that were set up by the trustee, today, the lawyer who handled the law suit got a letter from the trustee not to disperse any funds , but to contact the trustee so it could be distributed to creditors. a copy came to me and a copy to the ch 13 lawyer.
this law suit was settled about a year and a half ago, we received our money, spent it on home repairs and thought that was the end of it. no one ever asked about it until now.
our chapter 13 lawyer now wants to convert it to a chapter 7 because of this letter.
my question is**************...is this the right thing to do? what's involved in doing a conversion like this? and how much longer will it drag out the bankruptsy. as i said earlier, we only have 3 payments left and thought that once we paid them we would be discharged.
by the way, all of the payments were made a month in advance...never late.

thank you in advance for your advice.

 

[Ladynred]

Did your BK lawyer know you got that money 1-1/2 years ago ?? If not, why not ?

If you were not paying all your creditors back at 100% , then the Trustee most certainly would have taken the money when you got it, it's part of the BK estate. I don't know what good it will do to convert to a Ch 7 now, when you're only 3 payments away from the end of your plan. Converting will not change the fact that the settlement money was part of the BK estate and would have gone to the Trustee anyway. The fact that you spent it w/o notifying the Trustee that you even had the money is a problem.. the Trustee could very well ask that the money be turned over - even though you no longer have it.

So.. was your Ch13 plan a 100% payback plan ? The lawyer that handled the lawsuit is going to tell the Trustee that the money went to you a long time ago.. that's not going to sit well.

 

[vietnamvet]

Thank You For You Response Ladynred**************.
Yes, The Bk Lawyer Was Aware Of The Pending Law Suit. This Is Why He Directed Us To 13 Rather Than 7. He Said That They May Want To Look At It, But Probably Wouldn't Touch It. We Used It To Make Much Needed Repairs To Our House. He Also Made The Trustee Aware, But No One Ever Mentioned It Again. He Now Wants Us To Convert To Chapter 7, Thinking That The Court Will Forget About It As It Was Settled 18 Months Ago.
When We Received The Settlement, I Asked The Lawsuit Lawyer If Ther Was Anything We Had To Do, And He Said That He Had No Obligation To Inform Anyone Of The Settlement. There Was No Reason For Us To Inform Anyone Either, So We Didn't.
The Total Debt Was Brought Down To About 12k And The Trustee , Based On Our Income (disability) Agreed That All We Could Afford Was A Payment Of $175.00 Per Month For The 36 Month Period. I Know That Doesn't Add Up To The 12k, But We Were Told By The Bk Lawyer That After We Made Our Payments, The Case Would Be Discharged.
Thanks,

 

[Ladynred]

Did the lawsuit attorney know you were in bankruptcy ? I think your lawyer was wrong, because clearly the Trustee IS interested and either forgot or never was notified properly that the settlement money was distributed to you. You need to find out if there's a paper trail for all this. Unfortunately, assuming that the Trustee wasn't interested is faulty, especially since you were not in a 100% plan. I hope you have receipts for every single penny that you used, you may have to produce it.

 

[vietnamvet]

yes, bothe lawyers were aware of the suit. i've put calls to the bk lawyer and left a couple of messages, but have not received any return calls. i'm really upset at this whole situation as i thought that this nightmare would be over in 3 months when the last payment was made.

thank you ladynred for your input with this. hopefully we'll be able to resolve this without a lot of issues.

thanks again,
vietnamvet

 

[vietnamvet]

hi again ladynred...... just spoke with my bk lawyer and he thought it would be best to withdraw from the ch 13 and possibly file ch 7 either in fl or ga. he's not sure which depending on the homestead laws in each state. he said that way, the trustee has no juristiction in the ch 7 and that will release us from her asking us to re-pay the settlement. does this sound ok to you?
thanks,
vietnamvet

 

[Ladynred]

If you dismiss your Ch 13 at this point, and try to re-file a Ch 7, you will NOT be eligible for a discharge since your CH 13 will have been dismissed, and you cannot get a discharge in a Ch 7 because of the new time limits between filings under the new law.

Is your lawyer a SEASONED bankruptcy attorney ?? I'd be leary of the advice you've been given, I'd get a 2nd opinion, before you go any further.

 

[vietnamvet]

is there a difference between withdrawal of the ch 13 and dismissing it? he wants to withdraw it and he said that if we decide to file for ch 7, it should discharge in about 4 months. is he giving me wrong advice? please help! we're really confused now.

 

[Ladynred]

There are 3 ways you get out of your Ch 13 - voluntarily dismiss it (same as withdrawl); finish it; or CONVERT to a Ch 7. You must also understand that if you dismiss your Ch13 and file Ch 7, you will have TWO bankruptcies on your credit.

Yes, a Ch 7 would discharge in about 4 months, but you may not be ELIGIBLE for a discharge, you need to get that clarified. The new BK changed the rules on serial BK filings and discharge.