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Tricky timing question
Have a tough decision to make in a case and would like some input on the best way to proceed.
Salient facts:
Debtor wants to file a Chapter 7 case. This is an orange county case. Unsecured debt of nearly $300,000, but debtor has had very high income (over $100,000 annually). She has a piece of real property that is going to foreclosure sale first week of May. She no longer lives in said property, having moved out 6 months ago thinking she had to. Now the lender is offering a loan modification possibilty, but will take about 90 days to decide.
If we file the Ch. 7 today, she just BARELY passes the means test and then ONLY if the mortgage expenses on the 1st and 2nd (with property taxes and insurance) are allowed as deductions on the means test. (Debtor is currently paying $3,500 in rent for her and her 3 children, which doesn't factor into the means test, but thought I'd mention it).
The same mortgage lender owns the 1st and the 2nd. It's the 1st that is foreclosing and they state that the second has been "paid off" and is now in the loss department.
Debtor's income (which is 100% commission based) is going to be dropping by about $4,000 per month (From about $16,000 to $11,000-12,000) which MAY be enough to qualify her for Chapter 7 if we wait 6 months.
I'm trying to decide if we should submit the loan modification request (with a hardship request, etc.) and take the position that she's going to move back in to the real property if accepted and take a chance that the USTO will object, or if we should just wait 6 months and see what the means test looks like then.
One question I have is: Can I still include the prior mortgage payment that was supposed to be paid on the 2nd or is she no longer contractually obligated to make that payment? We won't know the new amount of the modified loan for several months, and only if her request is accepted.
I'm assuming the worst case scenario for filing now would be a dismissal which would require a motion to reimpose the automatic stay in a subsequently filed Ch. 7 case within a year, right?
Anyone have other thoughts/clarifications/input?
Thanks much,
______________________
Mark J. Markus
Law Office of Mark J. Markus
11684 Ventura Blvd. PMB #403
Studio City, CA 91604-2652
(818)509-1173 (818)509-1460 (fax)
web: http://www.bklaw.com/
This Firm is a Qualified Federal Debt Relief Agency
___________
NOTICE: This Electronic Message contains information from the law office of Mark J. Markus that may be privileged. The information is intended for the use of the addressee only. If you are not the addressee, note that any disclosure, copy, distribution or use of the contents of this message is prohibited.
IRS CIRCULAR 230 NOTICE: To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. tax advice contained in this communication (or in any attachment) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed in this communication (or in any attachment).
Have a tough decision to make in a case and would
like some input on the best way to proceed.
Salient facts:
Debtor wants to file a Chapter 7 case. This
is an orange county case. Unsecured debt of nearly $300,000, but debtor
has had very high income (over $100,000 annually). She has a piece
of real property that is going to foreclosure sale first week of
May. She no longer lives in said property, having moved out 6 months
ago thinking she had to. Now the lender is offering a loan modification
possibilty, but will take about 90 days to decide.
If we file the Ch. 7 today, she just BARELY
passes the means test and then ONLY if the mortgage expenses on the 1st and 2nd
(with property taxes and insurance) are allowed as deductions on the meanstest. (Debtor is currently paying $3,500 in rent for her and her 3
children, which doesn't factor into the means test, but thought I'd mentionit).
The same mortgage lender owns the 1st and the
2nd. It's the 1st that is foreclosing and they state that the second has
been "paid off" and is now in the loss department.
Debtor's income (which is 100% commission based) is
going to be dropping by about $4,000 per month (From about $16,000 to
$11,000-12,000) which MAY be enough to qualify her for Chapter 7 if we wait 6
months.
I'm trying to decide if we should submit the loan
modification request (with a hardship request, etc.) and take the position that
she's going to move back in to the real property if accepted and take a chance
that the USTO will object, or if we should just wait 6 months and see what the
means test looks like then.
One question I have is: Can I still include
the prior mortgage payment that was supposed to be paid on the 2nd or is she no
longer contractually obligated to make that payment? We won't know the new
amount of the modified loan for several months, and only if her request isaccepted.
I'm assuming the worst case scenario for filing now
would be a dismissal which would require a motion to reimpose the automatic stay
in a subsequently filed Ch. 7 case within a year, right?
Anyone have other
thoughts/clarifications/input?
Thanks much,
______________________Mark J. MarkusLaw
Office of Mark J. Markus11684 Ventura Blvd. PMB #403Studio City, CA91604-2652(818)509-1173 (818)509-1460 (fax)web: http://www.bklaw.com/This Firm is aQualified Federal Debt Relief Agency___________NOTICE: This Electronic
Message contains information from the law office of Mark J. Markus that may be
privileged. The information is intended for the use of the addresseeonly. If you are not the addressee, note that any disclosure, copy,
distribution or use of the contents of this message is prohibited.IRS
CIRCULAR 230 NOTICE: To ensure compliance with requirements imposed by the IRS,
we inform you that any U.S. tax advice contained in this communication (or in
any attachment) is not intended or written to be used, and cannot be used, for
the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii)
promoting, marketing or recommending to another party any transaction or
matter addressed in this communication (or in any attachment).
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