Is my cut-rate lawyer wrong?

[outsidetool]

The wife and I finally retained an atty...our first choice was the atty who handled my ch 7 back in 2008; I was over median then, wife did not file. Several other attys told me I couldn't do a 13...but this guy actually talked me in to it. So now, 6 years later, managed to sink my boat again. Pricey cars and no control. Anyway....consulted with the initial atty about the 13, and he told me that he wanted $1500 retainer to get started. That was rich for my champagne on a beer budget mindset. So I looked around and found, I guess, a kind of local bk mill...these guys file lots of cases. I told them the hard issues of our case (initial atty told me that "no one else would get us through"). But I thought, what the heck...these guys will file me for only $400 down (I separately pay filing fees to court after filing). Deal! Now I'm regretting it. The "you get what you pay for" thought is on my mind. Finally get to talk to the actual atty and he says: I have to pay my $70000 of student loans through the plan (I'd been told before, including on this forum, that the student loans would go in to deferred state during the plan). True, false?
I have a pricey car which I owe $40 k on; car books right now about $28k. Atty says that I might lose the car! What..? If I can finance a 100% payback plan, and include the car, why would I lose it? Cell phones for the family and monthly cable tv...yes, these are expensive. Atty says the cell phones "may have to go," and the cable tv be cut to basic cable. Really? Again, if we can fund a 100% payback (which would be without the student loans in the plan), why would we be required to cut everything? My understanding was that ch13 wasn't necessarily supposed to be fun or a walk through the park, but nor was it supposed to be a huge upheaval, especially in a 100% plan!
Comments appreciated!

[despritfreya]

1. Student loans are nothing more than general unsecured debt, just like a credit card. The only difference is that if they are not paid in full over the life of the Plan, whatever was not paid (including interest) will still be due once the bk is over. The creditor is listed in the bk, will file a proof of claim, and will collect its pro-rata share of the distribution to the general unsecured creditors. During this time it is precluded from asking you for $$ but the obligation does not go into “deferment”.

2. You are expected to do some belt tightening so, if your cell phones are not absolutely necessary then, yes, a judge could tell you “no”. This also goes for any other expense that simply is not necessary.

3. If the vehicle is too pricey then, yes, a judge could tell you to find something cheaper although doing so could prove difficult. You don’t need a Mercedes where a Toyota will do the same job at less than half the cost, assuming you can find one.

In essence, you can propose to keep your expenses where they are and your Plan payment down as a result. It will be up to the court to tell you “no”. And. . . if you simply do not want to do the belt tightening that is expected of someone in bk, then you can opt to let your case go and deal with you creditors one-on-one.

As to your comment that you can fund a 100% plan without the student loans, such is not a 100% Plan. 100% means 100% of all allowed claims and that would include the student loan if the lender files a timely claim. Now, if you propose to pay 100% of ALL allowed claims then I would agree that your lifestyle may not need to be adjusted. However, from the creditor’s point of view, why should you be allowed to live “high on the hog” while taking 5 years to pay if the creditor can get paid in 3 years by you cutting your unnecessary expenses?

As to your “cut rate” attny, I personally hate mill operations but it sounds like you are getting some relatively good advice. The issue I have is that the attny does not appear to be willing to at least start you out on that lower Plan payment to see what expenses “fly”. It could be that he already knows what the court will disallow and therefore is not willing to press the issue or it could be that he simply does not want to make waves and is looking for an “easy” plan confirmation. No way for me to tell.

Des.

[mynameainttracy]

From my experience, if an attorney is telling you that he doesn't think things will go over well in a plan it is probably because they see enough of the trustee to know what is and isn't acceptable to them.

[outsidetool]

From my experience, if an attorney is telling you that he doesn't think things will go over well in a plan it is probably because they see enough of the trustee to know what is and isn't acceptable to them.

Well, here's my update to my OP:
Went back to 2 initial attys, both with 20+ years experience at bk cases (one of them the one who handled my 2008 ch 7 after many others said "no way.")
--Student loans: It would seem in this day and age of the unpopular student loan bubble, that a claim is not usually filed (1 in 500 times of late); after all, they're going to survive the bk case one way or another. Involvement of student loans were causing a lot of other unsecured creditors to take lower payment during the term. By not filing a claim (or even in some cases dropping a claim) the total disposable income can be applied to the other creditors, more frequently resulting in 100% payback to the other unsecured claims. The student loans survive, happily accruing interest! And then you pay them off after you're nice and debt free!
--My "expensive" car: Not at risk in my case per both attorneys (neither of these guys are "cut-rate" by any means). Can I fund a 100% plan with the car included (and the student loans out of the equation)? Yes. This results in much more leeway given by the trustee and court. Many things come in to play, and can be argued if there were, by chance, any objections; need of a car, expense and even capability of getting another car at this point, potential repair claims on a cheaper, used jalopy, potential risk to be able to get to work (I am semi-rural, and work is not on the bus line)...etc. Note: MANY cars these days carry $40k loans--significant number of both these attys clients are doctors, other lawyers, etc., driving Lexus, Audis, etc.--very rare for anyone to have to give up their car, even under circumstances much worse than mine.
--Loss of cell phones, cable tv, etc: Very unlikely to happen. We're both working para-professionals who rely on significant need to be in contact. We have no home phone, just cells. The teenage daughter: the judge ain't gonna take the cell from her, if nothing else, safety issues. Cable TV: just count that's going to be a good chunk of assumed entertainment expenses...in a 100% plan? Not going to be an issue.

Side note: A plan needs to be reasonable...that doesn't mean having to cut every little expense and going through 5 years of hell. A high % of such plans fail (a high % fail anyway!) The trustees and judges know this. If a client is proposing a 100% plan...there is a lot of "magic" in that. Force debtors in to 5 years of hell, many with the means (like us) just may "play the game" of waiting things out and "engineering" a perfectly legal ch 7--the result: nothing for unsecured creditors.
Both these attys do this end-move quite often. I frankly did it to an extent in 2008 with an income 1.8 times the median. My only limiting factor for this again would be that I'm exactly 2 years away from being able to file a 7 again--but worst case, I could likely do a little whack-a-mole and make it 2 years!
Also turns out my "cut-rate" law firm has some various issues and is being investigated by the trustee's office. So they are being very conservative and do not want to have to actually fight for a client. They want to fill out papers and have things run through. So, yes, my cut-rate lawyer is now fired. He may not have been totally wrong on the letter of the laws...but his lack of experience and inability to be willing to fight would have screwed me over majorly. Of course, my case isn't over yet...guess I'll feel doubly screwed over if my higher-retainer lawyer is wrong...but, he got me through in 2008!

[despritfreya]

Sounds like pretty much what I said. Go for it and see what sticks.

Des.