Expert: Mark J. Markus- California Bankruptcy Attorney - 11/15/2007

Question
QUESTION: We had planned on filing a chp 13 to soley get rid of 2 condos. We plan on paying everything else at 100% and to avoid a definency bal we were going to buckle down and pay off within 7 months to avoid a definency claim since the property is in the state of FL, it takes longer to foreclose. We are doing this in fear that one particular mortgage company coming after the definency bal. My question is, I was told that because most of our debt is "non consumer" debt (the propertys were investment property) than we would be exempt from the means test regardless of our income and expenses. Currently we make $150K combined living in GA, so we don't qualify by our income. I have spoken to 3 attorneys and no one seems to know the answer to that one. They tell me Chp 13 is what I need to do and since I have the means of paying off early then it wouldn't matter anyway.  I'm scared of this whole thing because this is the ONLY reason we would be filing.  Your advice is much appreciated.

ANSWER: You are correct about the means test not applying under your facts.  However, in most jurisdictions, that is not the only requirement for a Ch. 7 case.  If your current monthly budget is showing a surplus of income, you will most likely not be allowed to do a Ch. 7 case.

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QUESTION: We do have a surplus after the budget is done. So do you think the 13 would still be okay and do you see any reason for any redflags if we pay off in 7 months (we plan to w/d money from a 401K). The payoff should only be around 11K at that time.

Answer
Actually, I may have been incorrect in what I said before.  You may still qualify for a Chapter 7 case even with a surplus budget, but I'm not sure a Ch. 7 would accomplish what you need, since you need to stop a pending foreclosure, correct?  You really need to discuss this with an attorney in your area.

I don't know what local rules your jurisdiction has about CH. 13, so you really need to discuss this with an attorney in Georgia.   I don't think anyone will be upset with a 100% repayment plan over 7 months.