? re Attorney Retainer

[boochase]

Here is something that may be of interest. I went to three free consults with Attorney A, B, and C and talked about Ch7 and Ch13. I decided to file Ch7 first and paid $500.00 as a retainer to Attorney B. After I met with Attorney B's paralegal for my second visit, I decided to change to a Ch13. Even though this law firm advertises that they do Ch13, in reality, they do not. They referred me to Attorney C. Attorney C tells me that the $500.00 will be treated as a discount to his full fee, but it will not count as a retainer. Attorney C requires me to pay $1350.00 to retain him and begin the CH13 process (paperwork, filing, etc) and his remaining fee will be added to the Plan. Question: am I represented by anyone at this point? can I request a refund of the $500.00 from Attorney B (or C) if I decide not to file? does Attorney B actually keep the $500.00 as a "referral" fee or does he forward it to Attorney C?

Lastly, should I be in a hurry to file Ch13? Only debt involved is $22K of CC (unsecured debt only). Is there incentive to file ASAP or can I wait to be served a lawsuit? Will delaying the filing make any difference to my credit score? Will delaying increase the payback amount because of continual fees and interest added to the balance? For that matter do CC companies actually sue? My CC are with Capital One and Chase.

I never realized that filing Ch13 would create so many questions. I apologize if I am repetitive, but I don't want to make any costly mistakes, and I do know that many here are experienced.

[HHM]

It sounds like attorney B did some work to prepare you as a chapter 7 and then you changed your mind, so he probably earned that fee. You may request a refund, but I wouldn't count on getting any of it back.

Attorney B is probably still "retained", until you pay attorney C, he is not your attorney. But there is nothing further for attorney B to do.

Why are you filing chapter 13, do you not qualify for chapter 7?

There is NEVER a reason to arbitrarily wait to file BK. Delay only delays your recovery.

[boochase]

It sounds like attorney B did some work to prepare you as a chapter 7 and then you changed your mind, so he probably earned that fee. But you may request a refund, but I wouldn't count on getting any of it back.

Attorney B is probably still "retained", until you pay attorney C, he is not your attorney. But there is nothing further for attorney B to do.

Why are you filing chapter 13, do you not qualify for chapter 7?

There is NEVER a reason to arbitrarily wait to file BK. Delay only delays your recovery.

Attorney B did NO work. I told the paralegal that I decided to do a Ch13. She said I had to complete the schedules and turn them in, with the $500.00 payment. After that (a week later), I was told that Attorney B did not do Ch13. So, in that situation, can i get a refund if I change my mind about filing at all? I do appreciate the response to who is retained (Attorney B). This matters because of the collection calls; they have been referred to attorney B. I doubt that attorney B has had to handle any of these calls, for I am getting 6-7 of them a day.

At this time, I qualify for a ch13. If I lose my job in the near-term (month or two) and our savings is exhausted, then switching to ch7 is necessary. In this situation, I felt that delaying the filing would help my decision and allow me to avoid having to make CC payments for a while. Comments on my reasoning are appreciated.

[Skipper]

Attorney B did NO work. I told the paralegal that I decided to do a Ch13. She said I had to complete the schedules and turn them in, with the $500.00 payment. After that (a week later), I was told that Attorney B did not do Ch13. So, in that situation, can i get a refund if I change my mind about filing at all? I do appreciate the response to who is retained (Attorney B). This matters because of the collection calls; they have been referred to attorney B. I doubt that attorney B has had to handle any of these calls, for I am getting 6-7 of them a day.

At this time, I qualify for a ch13. If I lose my job in the near-term (month or two) and our savings is exhausted, then switching to ch7 is necessary. In this situation, I felt that delaying the filing would help my decision and allow me to avoid having to make CC payments for a while. Comments on my reasoning are appreciated.

Hi boo,

From what I understand, these are some considerations for a Chapter 13 vs. Chapter 7...

First is, if you are in arrears on your mortgage, you can use a 13 to become current on your home loans. In addition, if your home is "underwater", you may potentially "strip" your 2nd mortgage.

Second is, if you wish to retain other assets such as autos, this may may allow for a re-amortization of the loan (cram-down).

I guess the thought is to total up the amount which can be discharged in a 7 vs. 13, with the BIG variable being the ability to bring a home mortgage current, and also the potential "strip" of a 2nd. If it makes sense to keep the home, the 36 month plan (if you are under the median), may make sense to you. If your home is not important, the a 7 is definitely worth looking at.

Skipper

[walkthaplank]

Unless you are attempting to pay off tax debt or arrears on secured debt, if you qualify for a CH7, there is no reason to be in a CH13. With a CH7 you will be done in 4-6 months, with a CH13 you are under the trustee's thumb for up to 5 years.

I filed CH13 and I wish I had gone with the CH7. The reason I went with the 13 was because I had some property tax arrears and I wanted to strip my second mortgage. Thinking about it after the fact, I could have waited until the CH7 was discharged and closed, bought out my second and payed off my tax debt with a 401k loan. Because I was so narrowly focused at the time, I am now going to be paying another 43 months to the trustee along with any tax refunds hoping they are too busy to look back over our plan and try to wring some more money out of us. If you can get the 7, take the 7.

[boochase]

Thanks for the comments. I am not behind on any mortgages or taxes or anything other than the CC's which I was told to stop paying. And unfortunately, I can't strip the 2nd, for our property value went up. My major concern is my income and the preservation of our cash. Hence the dilemma: I need the cash to generate monthly income from investing--the income generated this year has been insufficient; I am trying to get a job outside the home, but that venture has not been going well. Ch13 will allow me to keep the cash, but I may not be able to generate enough income to make the Plan payments. I only have $22K in credit card debt; otherwise I am not behind in anything. If I go Ch7, I will have to use $22K of the cash to pay the CC's (which I could have done myself if I could part with the cash). We have every intention of keeping our home (our mortgages are less than the rent for the area). This is why I am waiting--to see what my income will look like in a couple of months. Is this irrational?

[walkthaplank]

Thanks for the comments. I am not behind on any mortgages or taxes or anything other than the CC's which I was told to stop paying. And unfortunately, I can't strip the 2nd, for our property value went up. My major concern is my income and the preservation of our cash. Hence the dilemma: I need the cash to generate monthly income from investing--the income generated this year has been insufficient; I am trying to get a job outside the home, but that venture has not been going well. Ch13 will allow me to keep the cash, but I may not be able to generate enough income to make the Plan payments. I only have $22K in credit card debt; otherwise I am not behind in anything. If I go Ch7, I will have to use $22K of the cash to pay the CC's (which I could have done myself if I could part with the cash). We have every intention of keeping our home (our mortgages are less than the rent for the area). This is why I am waiting--to see what my income will look like in a couple of months. Is this irrational?

What are your states asset exemption allowances?

[boochase]

Florida has homestead--so house is protected. Otherwise, for nonexempt property, it is $1,000. So, I would have to include 50% of our cash minus $1,000.00 in my bankruptcy estate--which would be roughly 14K. Even at this amount, I cannot afford to part with the cash. The Ch13 payment looks good here, just afraid I wouldn't be able to pay it.

[walkthaplank]

Florida has homestead--so house is protected. Otherwise, for nonexempt property, it is $1,000. So, I would have to include 50% of our cash minus $1,000.00 in my bankruptcy estate--which would be roughly 14K. Even at this amount, I cannot afford to part with the cash. The Ch13 payment looks good here, just afraid I wouldn't be able to pay it.

You might be better off letting the cash go and starting over. You need to figure out what you will be paying over the next 36 to 60 months to save that cash. The amount you THINK you might be paying in a 13 may or may not have any relation to reality. My CH13 payment doubled over my proposed plan. Most trustees will keep you on a very tight budget, if you are already having doubts you should probably listen to them.

good luck