Should I convert from Ch. 13 to Ch. 7?

[mermaids614]

I filed for Chapter 13 on a 5 year plan in August 2008. My '01 Jeep was crammed down and included. I had gotten the Jeep 4 years earlier for $400 per month for 72 months with Wells-Fargo. I was behind in payments quite a bit. I also at the time had IRS debt of less than $2000.00. I had some other debts, mostly cash advances and due to hefty renewal fees I was paying, I was unable to keep up my car payment. I only met with one attorney. They told me that I should file Ch. 13 since at the time I wanted to keep the vehicle and it needed no major repairs. The legal assistant said that filing Ch. 13 would also keep the student loans at bay until after the Ch. 13 was discharged, which sounded great to me. They told me that if I filed a Ch. 7, I would have to pay all attorney fees up front, which I was unable to do. I really knew nothing about Bankruptcy. I just needed help and I figured this was the last resort. I even paid $50 last year to add more tax debt. The IRS wouldn't even allow me to add this new debt. So that debt from last year is just floating around anyway.

The issue now is, I was told by a Transmission specialist that I will eventually need to replace it. Of course this is costly, not to mention, there are a few other repairs needed. I don't have the money to pay for the repairs at this time. I don't know any place that's going to give me an unsecured loan. My attorneys claim to not know of any place that will (although he has been practicing for 30 years). The Debtor Education teacher told me I may be able to get a finance company loan, but I included a finance company loan in my Ch. 13., and doubt they will help me. Also, those places usually only want to lend you a couple hundred dollars, nowhere near the amount needed for the repair.The same teacher told me that I should really evaluate if it will be beneficial to repair a transmission on a 9 year old car. If I get a vehicle while in the Chapter 13, I was told the interest will be 24.99%. I checked my payment history with the Ch. 13 yesterday, and I haven't even touched my IRS debt yet. My vehicle has only gotten a tiny portion of what I've paid. My attorney on the other hand, out of his $2500.00 fee, has gotten $1581.00 out of the plan so far. I feel like I traded in the cash advance fees and high interest auto loan just to pay the attorney! Sorry for rambling, but from what I've stated, does it really make any sense for me to be in a Chapter 13? I have asked my attorney, but they aren't very helpful, usually only give opinions and condescending analogies and they are the ones who steered me towards the Chapter 13 anyway.

[justbroke]

I can't tell you whether Chapter 13 is right for you. If you went into Chapter 13, solely to save a car... that wasn't a good use for a Chapter 13. If you have significant IRS debt and trying to prevent an IRS Lien... maybe it was a good choice. However, I don't have nearly the financial data that your Attorney had or has about you.

Yes, attorneys get paid as an Administrative Priority in a Chapter 13. I mean, you asked him to work at the risk of not being paid. That's why they are paid first in the Administrative priority category (along which are the Trustee fees). Next is priority (unsecured) debt, and that would be the IRS. Then you have your secured debt payments. It reads to me like you really have a very low disposable monthly income amount and that your payments to the Trustee are small as well.

You didn't trade in the collection activity to pay an attorney. You paid so that you had the automatic stay and could keep your car, remember that. Attorneys don't work for free and what you did was defer payment. The code allows attorneys to be paid at a higher priority because they are at the risk of you converting to Chapter 7 and NOT GETTING PAID. It is what it is.

Attorneys do give opinions, also known as advice. They still need you to make a choice. Whether they use analogies that you don't like or not, it is your decision. AN attorney works for you, and you should remember that. They work at your direction and provide you advice (opinion) based on experience, precedence and the law.

I too can't tell you what to do, but my advice is that you really need to sit down and think about whether you want to convert to Chapter 7 and understand the ramifications. Once ramification is that you'll need to pay an attorney, again. Your current attorney might give you a discount, but I'm thinking that you already don't like your attorney.

[mermaids614]

convert

Yes, it was not smart to file just to save the car...........But honestly, I didn't know what to do. I didn't know anyone at the time who would admit that they had filed bankruptcy so went into it blind. Now as I think back, I should have met with a few more attorneys initially instead of just this person. I think what scared me off from deciding to do the Chapter 7 is that the paralegal told me that it would have to be paid up front, before I filed. I now don't believe this was true. I think my attorney would have offered a short installment plan. I don't know what I was in such a rush for. I did want to break free of all the payday loans I had. I was spending so much money on those things, and could never afford to pay them off. I think those were the catalyst that led to a lot of the hardship. Then, they were keeping the student loans at bay, as deferment time was running out. My attorney told me that it would make little sense to stay in the Ch. 13 now. He said he will give me a small discount, that I can pay him over a 4 month period and that he will waive the balance on Ch. 13. If I go to another attorney for Chapter 7 I will still owe my current attorney the balance from the 13, so it wouldn't save me any money. Sigh. Nothing I can do about it now, but look forward.

[justbroke]

Sigh. Nothing I can do about it now, but look forward.

Yes, just look forward. Perhaps a conversion to Chapter 7 will be the thing to get you going again. I want you to understand all the pros and cons and that you will need to save some money in order to do that.