Any Advice?

[Inrealdeep]

We couldn't qualify for a 7 but after a quick review my attorney suggested a chapter 13. I questioned this as we had no discressionary income. He claimed he had completed many of these before, successfully.

I allowed myself to be talked into it and have now lost the Attorney fee of $3,800 (wanted it up front, should have been my first clue) plus the additional thousands he had us spend. Now we may not have enough money to rent an apartment when our home forecloses shortly. We have been homeowners for over 20 years.

This attorney based our payment on the potential of my income increasing...I'm comissioned based with a sales territory that showed "potential" to produce an income to cover our bills. I was skeptical and asked what would happen if it doesn't, his reply was we'll go back to the Trustee and get your payment lowered. My income didn't increase, due to the economy it dropped dramatically and I couldn't make full payment to the Trustee. I informed my attorney of this and was told to send what I could afford and we would lower payments after.

The Trustee accepted the partial payment but then motioned to dismiss unless arrearages on our mortgage were paid in full, $15,000! (We included that in the 60mo. plan). Since the attorney made us spend what was in the bank we have no money and will end up dismissed and foreclosed upon. Basically we are now broke with no home.


I thought it was called Bankruptcy protection????

[BigJohn]

How long ago did the Trustee motion to dismiss?

[Inrealdeep]

About a week ago.

[Flamingo]

I am confused as to your statement "Since the attorney made us spend what was in the bank..." and also "...the additional thousands he had us spend." Can you be more specific? I am assuming you were trying to save your house and therefore agreed to file a Chapter 13. Your Plan would not have been confirmed if the Trustee felt it would not work and you would not be able to complete it successfully. Anytime there is a change in income after filing (up or down) your Plan can be modified due to that change.

If you could provide a little more detail as to your situation I think some of us could understand it a bit more as to what occurred.

[Inrealdeep]

The plan was not confirmed. I made my first payment of $2,800 but did not attend the 341. I told my attorney I wasn't comfortable with the plan. I could see my income steadily dropping with no relief in site. I then contacted my mortgage holder to see if they would arrange a workout on the mortgage terms. After submitting all financials and a letter from my attorney giving permission, the lender could offer no quick response. We are still waiting for a reply. The trustee then sent this letter to dismiss.

[Inrealdeep]

I'd also like to add that after we had completed all paperwork, just prior to filing, the trustee raised his percentage from 5% to 10%! What's up with that?

[HHM]

Well, you can't put this one on your attorney, you didn't attend the 341. What did you really expect to happen. Your attorney is right, if you cannot afford it, you can reduce the payment in the future.

Note, having an attorney ask for chapter 13 funds upfront is not bad thing, in fact, it is actually more beneficial to you. It prevents any conflict of interest in 2 ways.
1. The attorney does not have a counter incentive to put you into a 13 vs. a 7; it allows the attorney to explore your options, also, it makes the fee transparent to you. Also, keep in mind, the attorney still has to justify his fee to court.
2. If you do not complete your plan (or, as you have done, bail on your plan), you do not owe your attorey money so he/she can still help you.

[Inrealdeep]

Well, you can't put this one on your attorney, you didn't attend the 341. What did you really expect to happen. Your attorney is right, if you cannot afford it, you can reduce the payment in the future.

Note, having an attorney ask for chapter 13 funds upfront is not bad thing, in fact, it is actually more beneficial to you. It prevents any conflict of interest in 2 ways.
1. The attorney does not have a counter incentive to put you into a 13 vs. a 7; it allows the attorney to explore your options, also, it makes the fee transparent to you. Also, keep in mind, the attorney still has to justify his fee to court.
2. If you do not complete your plan (or, as you have done, bail on your plan), you do not owe your attorey money so he/she can still help you.

[Flamingo]

Thanks for the reply HHM.
I would agree with you if that were the case but my Atty told us he knew the Trustee and could explain the situation and probably get another 341 date within 2 weeks. So that’s what we really expected. We weren’t bailing on anything. Keep in mind we were negative -$500 in disposable. The plan was based on my commissioned earnings going up when actually they were headed down with the economy. I was to pay the first couple of payments from the small savings we had left. He laid out a plan that left us very little room to move downward as the unsecureds were getting almost nothing to begin with.

Aparently the Trustee agrees the plan won’t work and the case will be dismissed unless we pay 15k to arrears. We don’t have 15k so I assume the case will be dismissed.

So it appears I just spent several thousands of dollars to find out I can't qualify for a Chapter 13.

When you didn't show up for your 341 is when the problem started. At your 341, just as at ours, is when a modification could have been done as was probably the plan of your attorney. Since you bailed out of your 341 don't make excuses about the Trustee "agrees the plan won't work." Your own conduct in handling your case is the problem here and it probably could all have been worked out at your 341, your Plan modified per your attorney's advice/instructions and all would have been well. You will need to seriously discuss all this with your attorney to see what, if anything, can be done to prevent the dismissal but your attorney may not want to represent you now because you bailed once on a hearing and didn't listen to his advice.

[Inrealdeep]

When you didn't show up for your 341 is when the problem started. At your 341, just as at ours, is when a modification could have been done as was probably the plan of your attorney. Since you bailed out of your 341 don't make excuses about the Trustee "agrees the plan won't work." Your own conduct in handling your case is the problem here and it probably could all have been worked out at your 341, your Plan modified per your attorney's advice/instructions and all would have been well. You will need to seriously discuss all this with your attorney to see what, if anything, can be done to prevent the dismissal but your attorney may not want to represent you now because you bailed once on a hearing and didn't listen to his advice.

So why then did the Trustee allow an amendment of paying off the arrears? As punishment? I contend it was obvious to him that the plan was not workable unless the house is either thrown in or arrears paid off.

Anyone else want to weigh in?

[Flamingo]

So why then did the Trustee allow an amendment of paying off the arrears? As punishment? I contend it was obvious to him that the plan was not workable unless the house is either thrown in or arrears paid off.

Anyone else want to weigh in?

I believe not showing up at a 341 is grounds for dismissal especially if it was not an emergency situation. No Court takes no shows lightly. The Trustee may be offering you an alternative because he doesn't have the information he would have been provided by you and your attorney that would have modified your Plan since you didn't show up...Your attorney could not proceed without you. Your attorney can correctly advise you as to what to do from here on out.

[Inrealdeep]

Thanks Flamingo, I do appreciate your imput.

Maybe I'm wrong but I'm pretty sure the Trustee knows exactly why we chose to not to make the date. I think he probably acted accordingly. Shouldn't he have all my financials, and review the probability of completion of the plan? Isn't that part of the Trustee's job prior to the 341? If the Trustee did the homework I think he would have determined it wasn't realistic to complete this 13 without including the house, knowing we were trying to keep the house his result would be the only answer.

If I am correct, I feel the Attny should have told us this after reviewing our situation and asked us if we wanted to continue. It became aparent to me this wouldn't work unless the mortgage lender allowed a loan modification or we conceded to giving up our home.

But again what do I know, I'm just a guy losing his butt in bankruptcy.

[HHM]

People on commissions file chapter 13's all the time.

I think two things happened here.
1. Your attorney did not do a very good job.
2. You relied too heavily on your own assumptions.

You can actually file a zero payment chapter 13. Basically, you write into the plan.....
Right now I have no money, but I will in the future...in certain circumstances, those types of plans can be confirmed.

Bottom line, you were going to lose the house anyway. You are $15K in arrears and you could not even minimally handle a $275 month payment to the chapter 13 trustee (which is the minimum you would have to pay to cure the arrears) and pay your mortgage. My guess, you were too emotionally attached to your home. You would be better off walking away and filing a chapter 7.

[Inrealdeep]

People on commissions file chapter 13's all the time.

I think two things happened here.
1. Your attorney did not do a very good job.
2. You relied too heavily on your own assumptions.

You can actually file a zero payment chapter 13. Basically, you right into the plan.....
Right now I have no money, but I will in the future...in certain circumstances, those types of plans can be confirmed.

Bottom line, you were going to lose the house anyway. You are $15K in arrears and you could not even minimally handle a $275 month payment to the chapter 13 trustee (which is the minimum you would have to pay to cure the arrears) and pay your mortgage. My guess, you were too emotionally attached to your home. You would be better off walking away and filing a chapter 7.

Very interesting about the zero payment 13. Does that mean one is protected now but payments begin sometime in the designated future?

It's not only being emotionally attached but financially as well, the house is Florida waterfront and when the economy swings back around I could at least recoup some of my equity losses and not have to throw away money on rent. So I feel I owe to myself to at least get an answer from the bank.

We don't qualify for Ch.7. We have a combined income over 50k.

[MJJ3767]

It's not only being emotionally attached but financially as well, the house is Florida waterfront and when the economy swings back around I could at least recoup some of my equity losses and not have to throw away money on rent.

The one thing I've learned from being in a Chapter 13 ( and the poor economy in general) is that you HAVE to make some changes. If you can't make the changes, then you need to come up with other options. Chapter 13 is not for those that want to keep their same level of lifestyle and not give up material things.

My plan was also negative with my disposable income but I have to make it work. The way I look at it is this.......my payment ($127) is far less than a wage garnishment should my creditors sue and get a judgement.

As far as keeping your house until the economy picks up........how long are you willing to wait? How long are you willing to struggle to keep your house? What are you getting right now from owning a house over renting a house? You surely can't be building any equity. Millions of Americans have lost their homes and are happy to be able to rent over living in their cars.