Which attorney was right?

[Tom_Mi]

I'm preparing for the means test, and if I get stuck with a CH13 I'm a little concerned about the plan duration.

Atty#2 (The one I've chosen) says I've got to submit a 5yr plan. My income by itself is right at the median and Real Estate problems have brought me here...only about 8k unsecured debt right now.


Atty#1 said: "I always submit 3yr plans. The trustees are busy and generally just accept them". What the heck?!? I chose against Atty1 because he wanted his fees (2500) up front regardless of 7 or 13, and that sounded scary.

Who's right?

[keepmine]

I'm no Chapter 13 expert but, I thought all Chapter 13 plans were 5 year plans. Do you have a pacer account? If so, look at some of his 13 filings and see if any are 36 months {post Oct. 17, 05}.
As to the other lawyer. Did he fill out schedules I and J and determine if you have disposable income to fund a 13? Just being over the median is not a deal killer to file a 7.

[kornellred]

My attorney submitted a 36-month proposal for me even though I earn 8K/year more than the NJ state median income for a single wage earner. The trustee was having none of that - my plan was confirmed at 60 months after a two-month delay.
I believe that attorneys will sometimes propose a plan that a trustee will almost certainly object to - and for a variety of reasons, depending upon the case circumstances.

[Tom_Mi]

Thanks,
atty1 may have been a hack. Too bad though, he told me a lot of good things....

I'm still chasing 7, so maybe it won't be an issue.

[HHM]

Why file BK at all.

BK is not really a good tool for dealing with secured debt problems.

[liz417]

I'm preparing for the means test, and if I get stuck with a CH13 I'm a little concerned about the plan duration.

Atty#2 (The one I've chosen) says I've got to submit a 5yr plan. My income by itself is right at the median and Real Estate problems have brought me here...only about 8k unsecured debt right now.


Atty#1 said: "I always submit 3yr plans. The trustees are busy and generally just accept them". What the heck?!? I chose against Atty1 because he wanted his fees (2500) up front regardless of 7 or 13, and that sounded scary.

Who's right?

I was told by my attorney that most ch 13 plans will be 5 years unless there is 100% (or close to) payback.
We will have to pay the full amount of attorney's fees upfront too...I think it depends on the attorney, so people have it put in their plans...

Good Luck!

[Tom_Mi]

Why file BK at all.

BK is not really a good tool for dealing with secured debt problems.

First, thanks for chiming in. You make a great contribution here and I look forward to your posts.

I've got 2 4-unit properties that are way in arrears..they were financed improperly and I did too much maintenance too quickly.
I have short sale offers, (total of about 120k deficiency) and the bank's told me in a firm and intimidating way that "I can accept a voluntary or involuntary repayment plan".

In my estimation, numbers like that (and such a stoic position from the bank) are a one way ticket to BK, but I'm open to any other ideas.

To get these properties, I put large 2nds on my house and another property. Now they're not really justifiable either...I could limp along but I won't get anywhere in the next 20yrs. Those 2nds were supposed to get paid off by revenue from the aforementioned defunct properties.

[HHM]

When it comes to this type of situation...you need to call the banks bluff. After all, you ALWAYS have BK as your ace in the hole.

If the bank will accept a short sale, great...but read the fine print about how they are going to handle the deficiency balance.

Deficiency balances are handled 2 ways, (1) forgiven, (2) kept as collectable debt.
1. If forgiven; then you "might" have income tax consequences as forgiven debt is treated as taxable income by the IRS. However, if you were insolvent at the time, then you can get out of paying tax on the forgiven debt (there a numerious threads that talk about this, so do a search). The bank is most likely to simply forgive the debt and issue you a 1099. However, if it looks like you will have significant income tax consequences that are unavoidable, then you would want to declare BK; if the deficency is discharged, then there is no income tax liability.

2. If kept collectable, then you can play a waiting game and see how aggressive the bank gets. If they start getting aggressive, then you can always file BK and deal with it that way.

You should also note, when it comes to credit reporting, there is not too much difference between a short sale and a foreclosure.

[BnkrptcyLwyr]

I'm preparing for the means test, and if I get stuck with a CH13 I'm a little concerned about the plan duration.

Atty#2 (The one I've chosen) says I've got to submit a 5yr plan. My income by itself is right at the median and Real Estate problems have brought me here...only about 8k unsecured debt right now.


Atty#1 said: "I always submit 3yr plans. The trustees are busy and generally just accept them". What the heck?!? I chose against Atty1 because he wanted his fees (2500) up front regardless of 7 or 13, and that sounded scary.

Who's right?

Ok, there are several things ...

If you are above-median income debtor - commitment period is 5 years, period, UNLESS you are paying unsecured creditors 100%, in which case, file whatever plan length you can afford that will pay 100%.

If you are below-median income debtor - commitment period is 3 years, UNLESS you can demonstrate cause to extend it beyond 3 years (and usually you'll get no objection as to whether or not there is cause to make it longer than 3 years). Usually, below-median income debtors are trying to save a house, or something, and need 5 years just to make the payments as low as possibible. Even then, if you can pay off your unsecured creditors in full (100% dividend), you can do a plan less than 3 years.

[keepmine]

Ok, there are several things ...

If you are above-median income debtor - commitment period is 5 years, period, UNLESS you are paying unsecured creditors 100%, in which case, file whatever plan length you can afford that will pay 100%.

If you are below-median income debtor - commitment period is 3 years, UNLESS you can demonstrate cause to extend it beyond 3 years (and usually you'll get no objection as to whether or not there is cause to make it longer than 3 years). Usually, below-median income debtors are trying to save a house, or something, and need 5 years just to make the payments as low as possibible. Even then, if you can pay off your unsecured creditors in full (100% dividend), you can do a plan less than 3 years.

Thanks for the clarification!

[BnkrptcyLwyr]

Thanks for the clarification!

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