Over the median...advice needed on meeting with another attorney

[jwhit]

I posted a bit on my situation in the Ch 13 forum and got great advice that I should keep be able to qualify for Ch 7 so I am here for some more advice.... I have now spoken to 4 attorneys who all told me that I can only file 13 since I am over the median and ended up retaining the only one who does them on Wednesday for $200. He was supposed to get my hearing (collection agency) postponed yesterday but it did not happen. I was prepared to defend the lawsuit but did not go since he said it would be taken care of. Now I have a judgement and will be facing a 4800 garnishment. By the way, his fee will be $4500 for the entire 5 year plan. My house is in foreclosure and going to auction 4/20. I am meeting with another attorney on Monday.

I just completed the online means test again and this time kept my current $632 car payment in it. I would only be over $61 so not enough disposable income for ch13. If I include my mortgage (I don't want to keep my house), not even factoring in my 175/mo HOA fees, I am only over $28 so in an even better position.

Am I missing something? Have I been saying the wrong things to the attorneys? I have been honest in that I don't want to keep my car or my house, but should I be saying that I do want to keep my car? And maybe that I am working w/BOA for a modifcation on my house? Should I push back on the attorney I have retained or should I just move on? I have a feeling that his fee for ch 7 will be more than the $895 the attorney I am meeting with on Monday charges.

[btbeme]

Well, you are right in understanding that it isn't just about the Means Test, but also disposable income. In that sense, when over median income, making sure that your expenses are allowable is very important.

Allowable expenses vary from county to county and district to district, but there are some common area that tend to trip people up. The Trustee will look closely at your numbers if you are indeed that close.

So lets start at the top. You don't have a lot of time to get this squared away (mostly because of the house). Can you post some of your income and expenses so we can take a crack at them?

Some thoughts to ponder...
- Even though you plan to ditch the house, you likely still want to be able to use the mortgage on your means test. That means getting moving quickly.
- Don't worry too much about a garnishment from the judgement - that can actually help you, income-wise. And it can get scraped off in a Ch 7 anyway.
- You will need a good atty with the werewithal to help you through. Shaping your file to fit a Ch 7 can take time and effort. So far, you don't have much time, and from what I read the attys you have seen so far haven't made much effort. So keep interviewing.
- FYI - an atty doesn't necessarily want to try to fly a Ch 7 only to have it turned to a 13 by the Trustee. That calls their judgement into question a bit, and they feel like they lose some credibility with the Trustees. So attorneys, being humans, will take the easier path most of the time.
- It can be a difficult ride trying to get a file to just squeak under the Means Test limbo bar. And that is a dangerous area, since the Trustee can and will question expenses if you are very close between a Ch 7 and a Ch 13.
- Ch 13 isn't the end of the world. But try a 7 first and see if it fits.

[HHM]

What is your gross annual income?

You are receiving fairly standard, but accurate advice. If you are over median, 90% of the time, that person will be chapter 13. Yes, there can be circumstances where you have certain expenses that will allow you to stay a chapter 7, although it is much talked about in this forum, it is actually rare. Don't fear a chapter 13, you have to weigh a chapter 13 against the alternative (and the alternative is not a chapter 7 if you don't qualify). Chapter 13 is about getting back in control.

As for attorney, I can practically guarantee that an attorney that charges $895 is not going to have a means test fight. An above median chapter 7 is easily a $2,000 - $3,000 affair if you actually want to hire a good attorney that will fight for you. You shouldn't even waste your time with that attorney on Monday.

btbeme already gave good advice about what it takes to do chapter 7 and be over median. Yes, you want to be able to use your current mortgage, assuming it is higher than the allowed expenses and HOA. But the US Trustee is not stupid, they will ask, "you haven't been paying on it in "x" months, or the HOA, do you really intend to stay? Also, districts differ on the car, since your car payment exceeds the IRS allowed ownership expense, you may not get to claim all of it (however, you list the difference under the secured debt portion of means test).

[daytona]

I would suggest finding out who the Trustees are in your district and see if they also practice privately, most do! If you don't know who they are you can log onto pacer and pull up some cases and google search them. The advantage is these attorneys have intimate knowledge of what will fly and what won't (due to being ttee's) and can probably help you immensly. Usually they aren't cheap...but you typically get what you pay for.

[ValleYum]

I would suggest finding out who the Trustees are in your district and see if they also practice privately, most do! If you don't know who they are you can log onto pacer and pull up some cases and google search them. The advantage is these attorneys have intimate knowledge of what will fly and what won't (due to being ttee's) and can probably help you immensly. Usually they aren't cheap...but you typically get what you pay for.

I think this is super great advice!!

We paid a bit over 2k (including filing fees and vehicle reaffirmation) for our OMI Ch 7 here in SW Washington.

[jwhit]

Thank you for your responses. My attorney does do over the median income ch7; he did one for a friend who said that her trustee barely let it go through. I will admit to being overwhelmed during our consult. I think that his purpose of Ch 13 is to halt foreclosure for possibly up to a year and protect potential assets. I have a personal injury lawsuit that will be filed later this year. He estimated that I would get 16k, of which I could exempt 10k. If it ended up being more (my PI atty thinks it will be substantially more), I could voluntarily dismiss and use the proceeds to pay the unsecured creditors who filed claims at 100%, my car and the fees. In the meantime, or if it doesn't happen like I hope, this would put me on a plan to get me on my feet again. The proposed payment will be around $325, which is almost half my current car payment, so it would be a huge relief for me. All of my credit cards have been charged off and I am just waiting to be sued by the other 3 collection agencies that bought them.

Does my understanding on this right to you guys? That I can voluntarily dismiss at any time (i.e. before the settlement is paid out if it makes sense to dismiss) but will have to pay the unsecured creditors, my car and the fees? How long will the automatic stay remain in place if I am planning on surrendering the house?

All I really want to do is stave off the pending garnishment and buy a little more time in my house so I can get back on my feet again. I was planning on using my settlement proceeds to pay down my debt anyway. Any thoughts? Is my logic flawed? I worry about that since I am under the gun with my house....

[keepsmiling]

Sounds like your atty had thought this through and has your bases covered.

[HHM]

Yes, you can voluntarily dismiss at any time, However, dismissing a confirmed 13 is rarely in your best interests, creditors get to go back and add interest and late fees from the date you filed. The Goal of any BK is a discharge, that is what you want to get. Dismissing does not achieve that goal.

As for the house, unless you start making the mortgage payment again after you file BK, you will only have 2-4 months before the lender will have permission from the BK court to foreclose. But a more specific timeline will depend on how foreclosures work in your state and how aggressive the lender will be in moving forward with it.

[jwhit]

Yes, you can voluntarily dismiss at any time, However, dismissing a confirmed 13 is rarely in your best interests, creditors get to go back and add interest and late fees from the date you filed. The Goal of any BK is a discharge, that is what you want to get. Dismissing does not achieve that goal.

As for the house, unless you start making the mortgage payment again after you file BK, then you will only have 2-4 months before the lender will have permission from the court to foreclose. But a more specific timeline will depend on how foreclosures work in your state and how aggressive the lender will be in moving forward with it.

This is all just speculation but if I were to get a larger settlement than allowed to exempt, after all the creditors are paid, would I be allowed a discharge and the remainder would come back to me? Since my accounts are with JDBs, would they be allowed late fees even though they can't collect those now?

[SMinGA2]

With ch. 13, you can generally keep non-exempt assets - as long as unsecured creditors get at least as much as they would if you filed ch. 7. At the moment - use the $6k non-exempt example. Unsecured creditors would need to get at least $6,000 during your plan for you to keep it.

Filing ch. 7 now, with that lawsuit out there, on the other hand - would not give you a way to 'protect' the amount beyond what you can exempt. That may be the bigger issue, more so than having a higher income.

[jwhit]

Thank you guys for weighing in. I think that I was trying to be a little greedy here. In reality, my only option is Ch 13 and it is really not a bad option for me. The payments will be doable and whatever happens with the settlement will shake out later. What is most important now is for me to just get back on track. This will allow me to. I will be filing in the next couple of weeks.