{"id":597,"date":"2012-06-19T07:05:40","date_gmt":"2012-06-19T07:05:40","guid":{"rendered":"http:\/\/www.westcoastbk.com\/blog\/?p=597"},"modified":"2012-09-12T06:14:59","modified_gmt":"2012-09-12T06:14:59","slug":"the-argument-for-not-filing-an-asset-chapter-7-bankruptcy-case","status":"publish","type":"post","link":"https:\/\/www.westcoastbk.com\/blog\/2012\/06\/the-argument-for-not-filing-an-asset-chapter-7-bankruptcy-case\/","title":{"rendered":"The Argument For Not Filing an Asset Chapter 7 Bankruptcy Case"},"content":{"rendered":"

By Ryan C. Wood<\/a><\/p>\n

First let us establish what an asset Chapter 7 bankruptcy<\/a> case is.\u00a0 An asset Chapter 7 bankruptcy case means that there are assets that cannot be exempted from the bankruptcy estate and creditors are entitled to the value of these unexempt assets.\u00a0 The Chapter 7 trustee assigned to the case will administer the bankruptcy estate for the benefit of creditors.<\/p>\n

So what is the argument against filing an asset Chapter 7 bankruptcy case?\u00a0 The issue is what is in the best interest of creditors, or those who are owed money?\u00a0 Let\u2019s say the assets available to creditors\u2019 totals about $20,000.\u00a0 The Chapter 7 trustee will receive 25% of the first $5,000; 10% of the next $45,000; 5% of the next $950,000; and 3% of the balance.\u00a0 This is a sliding scale.\u00a0 So an estate totaling $20,000 the Chapter 7 trustee will get approximately $3,500.\u00a0 These fees are statutory.\u00a0 In contrast a typical Chapter 13 trustee will receive about 10% of the estate for administering the case depending upon the jurisdiction.\u00a0 So if the estate totals $20,000, the Chapter 13 trustee will receive approximately $2,000 for administering the estate.<\/p>\n

So what is the problem here?\u00a0 There is not a huge difference in the trustee fees right?\u00a0 Well, in the Chapter 7 case the trustee will most likely hire an attorney to assist with the case.\u00a0 Most attorneys that work for trustee\u2019s charge anywhere from $300 to $600 an hour.\u00a0 If the attorney for the Chapter 7 trustee spends a mere 10 hours on the case in the example above, the attorney for the Chapter 7 trustee would receive around 25% of the total estate of $20,000.\u00a0 So the Chapter 7 trustee gets about $3,500 plus their attorney fees of $5,000 equals $8,500 in fees.\u00a0 This represents almost half of the money available to creditors.\u00a0 In contract the Chapter 13 trustee only receives about $2,000 total.\u00a0 What is in the best interest of the creditors then?<\/p>\n

To be fair, most bankruptcy<\/a> attorneys must charge higher fees for a Chapter 13 given the additional work that is required.\u00a0 So the bankruptcy attorney fees in theory could equal what the Chapter 7 trustee\u2019s attorney may charge.\u00a0 But most jurisdictions cap what can be charged for a basic Chapter 13 case.\u00a0 These caps can vary widely depending upon the jurisdiction.\u00a0 Also to be fair, some Chapter 7 cases absolutely need the trustee to hire an attorney to help administer the bankruptcy estate.\u00a0 This is especially true when there are issues regarding the value of assets and what assets are part of the bankruptcy estate or not.\u00a0 Recent there has been news from major news organizations about the amount bankruptcy professionals charge in Chapter 11 reorganization cases.\u00a0 Some of the hourly rates are as high as $1,000 an hour.\u00a0 It is hard to balance what is in the best interest of creditors, especially when most creditors do not participate in small asset Chapter 7 cases and Chapter 13 cases.<\/p>\n","protected":false},"excerpt":{"rendered":"

The issues is what is in the best interest of creditors or those that are owed money. Will creditors receive more money in a Chapter 7 case or a Chapter 13 case? The answer really depends upon the circumstances of the case and whether there are issues to litigate.<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[56],"tags":[],"_links":{"self":[{"href":"https:\/\/www.westcoastbk.com\/blog\/wp-json\/wp\/v2\/posts\/597"}],"collection":[{"href":"https:\/\/www.westcoastbk.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.westcoastbk.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.westcoastbk.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.westcoastbk.com\/blog\/wp-json\/wp\/v2\/comments?post=597"}],"version-history":[{"count":5,"href":"https:\/\/www.westcoastbk.com\/blog\/wp-json\/wp\/v2\/posts\/597\/revisions"}],"predecessor-version":[{"id":690,"href":"https:\/\/www.westcoastbk.com\/blog\/wp-json\/wp\/v2\/posts\/597\/revisions\/690"}],"wp:attachment":[{"href":"https:\/\/www.westcoastbk.com\/blog\/wp-json\/wp\/v2\/media?parent=597"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.westcoastbk.com\/blog\/wp-json\/wp\/v2\/categories?post=597"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.westcoastbk.com\/blog\/wp-json\/wp\/v2\/tags?post=597"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}