Scared,confused, and this is just the beginning?

[The Big B???]

Thanks to you all for your contributions and feedback. I'm not in a state of panic. But I am deeply concerned.

OK I am seeing another attorney this evening after work armed with a growing laundry list of questions and concerns, then I see another Friday morning before work. At that point I will have seen 4 all together and will make up my mind on what to do.

Regarding my house. I simply cannot afford to lose that house. We are current on the payments, and my wife who is ailing, is banking on being able to sell it in a few years, pull equity out and move to a larger home in a warm climate. We/she is in a 80/20 mortgage situation and something must be done by the third year I cannot do anything that will risk that.

So, I'm thinking about wether I can take my name off the deed now (almost 3 years prior to a sale and move), continue to make minimal payments on my unsecureds where I can, (I do make commission, can hang onto that second job, my son starts kindergarden in a little over a year and that will free up $420 a month, and plane tickets for the ex wife end after another 3000 is paid over the next year), add to that that I am in a position where my income will increase yearly by about 10K from this job and we/she (being on the mortagage) should get a decent return for tax year '05, and maybe I can make it for the next 3 years.

It won't be pretty and I know I will never ever be able to pay off this debt, but perhaps I can at least get as far as her purchasing the next home without me on the deed of course, and then at that point taking the plunge.

Maybe I'm overthinking, maybe I should just go 13 and take the plunge so I know the house is safe now. Either way my credit is shot for the forseeable future.

My wife is thinking that perhaps we should divorce and take me off the deed so that I can be legally detached from her for certain and that she will for certain not get caught up in this. It would be a divorce for the sake of getting this cleaned up and we would remarry once this is a year or so past.

Thoughts???

[Mom13]

I can tell you are going through so much and I don't want to make it worse. I have to tell you though, our attorney made Chpt 7 sound so quick and easy. I was 8 months pregnant when we went for the hearing and the Dept of Justice showed up to dispute the case and basically accused us of fraud due to too much money/assets. Our attorney never even mentioned that possibility. Believe me it was scary! Anyway, we had to voluntaryily dismiss the chpt 7 and start over with chpt 13..paying the attorney again! So, while everyone else seems to have great ease with Chpt 7..there are certainly some of out here that did not! Good luck!

[The Big B???]

Voluntarily dismiss the chapter 7? That brings up a good question I was meaning to ask tonight. Can I start a 7 and during the process change gears and swap to a 13? Say if it looks bad with the trustee during the meeting? Is there a bailout point? A point of no return etc?

Also, I've been reading about prepping for a BK and monies to have or not have available etc. in your accounts. I have a joint checking account with my wife that is only there for us to transfer money back and forth. I do not contribute my pay to it. She has her paychecks direct deposited into it and then moves that to her own account to pay her bills. I would imagine that I should remove myself from this account prior to filing yes? Is there a time frame to be concerned with? there is never more than a thousand dollars in there at any time.

[Mom13]

I know that you will get very smart answers to those questions. We've been in the chpt 13 for almost 3 years now and I'm still not exactly smart about the ins and outs. We are basically holding our breath until the 36 month so we can try to get out of it. I used the term volunarily dismissing the Chpt 7...but when the Department of Justice shows up with a badge..and pretty much accuses you of trying to fraud the government--it's not exactly voluntary. Our attorney was very unsettled by the whole thing..and never really gave us a choice. He said you will have to file a motion to dismiss the 7 and start over on a 13. I definitely wish that I had known of the possibility of that happening. In your case, at least you know it can happen. A chpt 7 seems much quicker and cleaner - if it works - so if you can go that way - I would!

[The Big B???]

Mom,

Just spoke with the very first attorney I met with again on the phone during lunch. He gave me another 20 minutes of his time free of charge.

Anyway, I asked quite a few more questions. Here's the scoop (I'm in NY for those that are following along :p

After going over my expenses and income I come up about 2k short per month. He felt that going 7 was the best option and that the house is safe regardless due to us having no real equity in it, and if it was deemed to have equity or if there was anything that caused the 7 to not go through, at that point the 7 would be dismissed and then I could go for a 13. He told me that he could not foresee a trustee going after the property being that we have no real equity in it. We could show a very current appaisal and the current mortgage amounts (we financed 100% with a 6% sellers consess.) Further, he felt that it would take a hell of a scumbag to want to take things farther on this and stand before a judge making a case to kick a cancer patient out of her home. Again we are not behind in the home payments.

I was told that to try to get off the deed and then file anytime soon was defintily a red flag, that if I was entertaining that option, then to literally wait a few years. If I wanted to go that route, then get off the deed now, don't file, play the credit game a few years and then do the BK. He also warned that by that time I would be dealing with the new laws and may have to go through some form of credit counseling. Further, on the house, he suggested waiting till June 1 before filing so that I have had the house for at least 3 months prior to filing. And then during the trustee meeting being honest about my wife getting sick, not having an intention to file prior to filing, and just getting overwhelmed by the payments due to her drop in income.

I was told that if the 7 gets dismissed then it is myself with my attorney that will put forth a plan of repayment for a 13 and that the plan then gets reviewed by the trustee and tweaked if need be. That the plan would be based on the equity/assets I have as a payback. (I don't believe I have any). He also said that at this point I was putting the cart before the horse by thinking of a 13. That he honestly felt a 7 was the way to go and that I would make it through. I am not and have done nothing fraudulent.

He also warned that the US trustee may want to scrutinze my case due to recently getting the home (Feb 28 of this year) and the amount that I owe in debt being a bit high (close to 100K). He warned that if that happened it would cost me more in legal fees. He was upfront.

He told me that he alone would work my case, he would be there from start to finish, he is not a bankruptcy mill and that in fact he does a lot more financial planning for his clients now in his practice, and sees bankruptcy as a form of that in a lot of cases (a way to get back on your feet and rebuild).

As far as my second job, he told me it was up to me whether or not I wanted to hang onto it as even with it I am still short the 2K per month. And that he flet it would be understandable to drop it to be at home with my wife or to keep it to make up her income. He did not feel that it was a tremendous amount of money and that at this point it holds no bearing.

So there's the latest. Next meeting with another attorney tonight at 6.

Comments?

[Mom13]

I think with your medical situation - your attorney is right - the judge would probably decide in your favor. Ours was a case of everything "looking" like we had assets that we really didn't have. 401K/vacation buying with our jobs/leasing 2 vehicles that are pretty expensive but my husband's brother is an engineer with the car company so we get employee rates on the cars. None of that was allowed to be explained so I think our deal was just very rare. Our attorney said they are going after people that have high incomes and benefits. It would definitely be in your best interest to try the Chpt 7.

[The Big B???]

Well it's been an interesting 2 days and I've learned alot that I hope some of you will be able to take info from.

I met with an attorney Thursday night after work. He answered a lot of my questions, yet for some reason I still felt a bit uneasy. His office looked like a hole in the wall and he wanted $1500 for a 13.

We discussed my house, wich he felt would have to come in on appraisal for over 317,000 for me to worry losing in a 7. He mentioned that the trustees on Long Island have wisened up to the market here and are having homes appraised before giving up a discharge here.

Long story short I left his office feeling like a 13 was the way to go due to not wanting to even risk an unfairly high appraisal on our home and thus putting our future and my wife's present into jeaopardy.

I saw another attorney this morning. This was the meeting I had most anticipated. It was with the most credentialed of all of the attorneys to date. He is the one that scared the crap out of me on the phone the other day.

Anyway, not to give up his resume here but the most notable thing about him is that he is one of the trustees here in my region (we have 3), he handles consumer and business BKs and has debtors as clients as well as fights for the creditors when in trustee mode. We talked for quite a while, he gave me an hour and a half of his time for free this morning and even met me at 7AM to accomodate our schedules.

Regarding my case I was told the following.

While most likely he did not think my house would come into play in a 7, there was till the outside risk, further, my IRS debt cannot be washed by the 7, so even if all went well with the 7, I would still be left with the IRS coming for their 8,000 plus continually growing penalties and interest.

Best plan of attack he felt was for me to go for a 13. The IRS money can be put into the 13 as oppoese to a 7 and if done so it would put an end to that situation via paying it into the plan.

Regarding the plan, together we would craft it and he would tweak it to make it work. The payback amount to my unsecureds would be devised by the taking the equity I have in my home (on paper) and paying that figure plus the IRS money over 36 months.

In my case he felt that a plan could be put forth that gives the unsecuredes very little to 0% payback should the house (myself) not have any equity. Essentially I would be getting 7 relief from the unsecureds and taking control of the payback with the IRS.

I wondered how that could be done and he said that if there is no equity, and all you show that you can pay is what you are obligated to pay (IRS) then it should go through.

Lastly he said that his fee was $1500 PLUS $1,000 that will be paid from the plan and ONLY if the plan gets approved. He then said "do you understand what I am saying when I tell you that I will not get that money if I don't get your plan approved"? I said it means that you are going to get the plan approved to get that $1,000. and he said yes he would work to get that done.

Now to be fair I must share that this was the nicest office setting I had been in to date, he did not come across as slime, in fact he seemed very empathetic and yet at the same time, very very serious. I felt like he was most definilty the most informational attorney I have talked to and I liked the fact of him chasing commission of sorts, in order for me to pay that much less back in the end.

Further, being that he dons the Trustee garb as well, my thoughts are that he knows the other 2 first of all, so in a 314 or any type of interaction, he should most likely get what he wants to done, and that as a trustee, he already knows what makes for a red flag and what does not.

Please let me know what your thoughts are.

I'll share more info and the story as it unfolds.

Thanks

[The Big B???]

Any thoughts on this from anyone here?

Maybe I'm just not trusting of attorneys, but a part of me feels like perhaps I'm dealing with a wolf in sheep's clothing if my attorney is also a trustee at times. I mean he is supposed to be working in his client's best interests if I hire him, yet how can he if at times he is representing the other side? Is'nt he by career choice essentially always in a conflict of interest? Am I staring a good opportunity to get this sorted in the face and not realizing it based on past dealings with attorneys who truly were scum? Am I thinking too much?

I brought over coldwell banker yesterday to get a quick idea of what my home is worth. I was told that they would shoot for 315 but most likely could get 310. Maybe on a very high as much as 324. We owe roughly 287 on it. I know one thing after having them there. If I'm going to do something I must do it soon. the house is going up in value fast and I'm already reaching the cusp of my 10,000 exemption.

Got my frist collection call on sunday from Discover. That madness is about to begin as well.

Anyone with feedback regarding the attorney or chapter 13 experiences, good and bad, please chime in.

Thanks!

[The Big B???]

First call to my work now. Discover called. This is not as easy as it sounds (holding back from paying). Need to get filed ASAP.

[Ladylue]

Hi, I have been reading your posts for quite some time, and have never posted on this forum. I am like you, fairly good income, and a high unsecured debt load. I am a single mother, who has been making it okay, but in the last few months the deficit each month is building.....anyways....

I know what you mean about creditors calling. I ALWAYS paid my credit card payments on time. I am going to file a Chapter 13 under the old laws, as I need to use the "lien stacking" on cars before the law change to be able to get back on my feet in 3 years.

So I got my first creditor call from Captial One....I about cried and said, I will pay, soon, very soon. My plan will be that my creditors will probably get 100% on the unsecured dollar. I just am running in the hole each month, have an expensive upside down car, and I need the 0% interest in a 13 to get my bills paid off and GONE in 3 years. I monitored and watch my credit score like a hawk.....now I know I can't do it anymore without a break in the interest, and I am waiting the 90 days inbetween my last CC charge as instructed.

Good luck. I so dread the next 90 days of creditor calls. They will be taken care and paid off, I just have to make it!

Ladylue

[InDebtInMD]

Good luck. We have started getting the creditor calls too. We also always got the bills paid on time, but unfortunately I used cash advances from other credit cards to help make the payments.

Once they stopped sending the convenience checks, I cashed out two Roth IRAs over a year ago to help with the bills (and my wife's maternity leave).

After that was gone we refinanced the house to put the 1st and 2nd mortgages into one payment, got a little cash out of that that lasted until the fall.

After that for some reason I got a few bank draft checks from local lenders in the mail (Wells Fargo, Beneficial, Citifinancial) that I could not resist cashing - anything to put off the 'day of reckoning' - these got me through the winter.

After that I e-filed my taxes quick as a rabbit in and got our federal and state refunds which went to help pay the minimums in Feb and some of March.

All through this period I was also selling whatever stuff I could on eBay (CDs, books, etc) to help with the bills.

The 1st payment we could not make was on the MBNA card with the $40,000 balance - they called my wife in April asking for a payment and that was how she found out about all of this.

MBNA told me they could help me with some sort of consolidation loan if only we would make a speedraft payment to keep the account from going over 30 days late. I did this ($757), and after transferring me to someone else they told me they could not help. (how foolish of me) Good thing I got a bonus check in the amount of $767 that very same day, otherwise I would not have had the $$$ to pay the attorney that we ended up seeing a few days later)

I have literally been using credit to pay for credit, and it caught up with us. It has been several years since we have made any major purchases on a credit card.

My wife was using her store cards recently, but that was because she was in the dark about the whole situation. She knew we had bills, but not $140k worth.

We immeditely went to CCCS to see if we could get on a plan with them, but the counselor there demonstrated to us that BK was really the only option - they wanted $2800/mo from us for 6 or 7 years.

Amazingly my wife did not toss me out of the house, and to be honest working together with her to come up with our budget for the petition has certainly made us closer and now I feel like we will be 'team' when it comes to finances in the future.

Hopefully that fact that I already burned up our savings to pay the minimums on these credit cards will count for something in the eyes of the trustee. I'm worried he might ask about our tax refunds ($4000 total), but again that was used to pay the minimums on the credit cards, so the creditors already got it as far as I am concerned.

I do have $12k in a 401k that my attorney is going to try and exempt, but at this point the trustee can have it for all I care. I can't live this way anymore and am really looking forward to getting through this process. Our Chapter 7 petition should be filed anytime now, and I'm thinking our meeting may be in June.

Looking forward to living the cash lifestyle!!!!

sorry for the long post.

[The Big B???]

Q & A

Thanks for chipping in. Amazing how alike we all are.

Here's something I thought you would all find interesting. After my last attorney meeting I followed up with a few questions like these via email:

Based on your credentials and experience I understand that you are very busy. That being the case, How much time will you be able to devote to my case, and will I be working with you or will I find myself standing next to your associate etc. on judgment day(s)? How much access will you give me while on my case? Will it be phone tag or will you be available for Q & A? What time frame do you have available to work on my case?

I got this back 13 minutes later:

I will always answer my phone. You saw that when we met. Further my
clients have my cell phone number to reach me in an emergency. I personally
handle all appearances in court unless unavoidably I have to be in 2 places at
once. I hope to be your atty, not your bankruptcy atty. By that I mean I
hope you will think of me first whenever a legal question arises. I will
always try to assist either over the phone, email, or in person. Bring
as much money as you are comfortable with. I never promised a 0% plan. I
need more information from you regarding your expenses and income and then I need to work up a budget. Yes it is possible for a creditor or the trustee
to ask the court to extend your plan but it rarely happens. Call for a list of
what I will need for our next meeting. Please bring anything you may have
regarding your wife's diagnosis and prognosis.
_____________

I'm moving forward on this by week's end with $200 as a down payment to get this started. I'll be cashing out the nest egg to the dollar with the filing fee. Uncanny how that works.

Thoughts?

[Ladylue]

I think that this attorney sounds professional, sincere, and like the one to go with. Although, I am an attorney too, I cannot always say that our profession, like others, has a few bad apples.

Good luck. Keep us posted.

Lue

[The Big B???]

Driving myself nuts has got to stop. Cooler heads prevail and I have decided to take a breath and reasess the situation.

In doing so I contacted my accountant to find out that the amount I owe on back taxes can be worked out via penalty abatement or cutting a payoff deal. Armed with that I'm now thinking about filing a 7 first and taking care of the taxes afterword.

I devised a few questions that I sent to all of the attorneys I met with. Here's the email. To date I have not paid a dime for any of these attorney's advice.

"I'm putting together all of my documents and info to get started. I have some final questions that I need answered before I can move forward.

I contacted a home appraiser to get the house appraised and see exactly what is going on with the equity or lack of it situation.

I have spoken with my accountant regarding the money I owe the IRS from 2001. I was told that he may be able to get the penalties knocked off and possibly cut a deal. That being said, Does the IRS money have to be
in the BK? Could I take care of the past due IRS situation on my own outside of a BK? Establish a payment plan etc.?

If I file a 7 and the house becomes a sticking point (too much equity), can I convert to a 13 at that point to save the house?

What is the cost to convert? What is involved and how much do you charge to file a 7? We never covered that fee. You quoted me on the 13.

Thanks!"

So far I have recieved 2 responses. They came from the first attorney (family function have your answer by Monday) and from the last attorney (the trustee) "You have a one time right to convert from chapter 7 to chapter
13. My fees are all spelled out on the retainer agreement. Conversion from 7
to 13 is about $1500. A chapter 7 is approx. half the cost of a chapter 13.
If you file a bkry any agreement with the IRS is out the window. Either make a
deal after filing or DISCHARGE it ALL in a chapter 7. Call for further details."

I have decided to really dig into the research. Last night I came home to a letter from the low cost attorney. A welcome sight that truly made chapter 7 nothing to be afraid of. I began to wonder if that is what most of this is that I am facing...A fear of the unknown.

I hit the web and found the bankruptcy 341 meeting calendar for my district. I poured over it. I made a list of all of the attorneys that were representing clients. I scored them via who was there most. Turns out it was the low cost attorney. I'm thinking that they are there the most so that has to be a positive in terms of relationship with trustees and sheer daily experience in the trenches. Further I saw just how many hearings were scheduled in just one hour. One day had a high of 16 and another had a high of 37...IN ONE HOUR!!!. Imagine that for a moment. This to me sounds like a revolving door. Step up say your name, get the stamp and move on.

I know I'm simplifying, but maybe just maybe that's what these 7's really are, and maybe that is the reason for the new law. It's just too easy!?

Went ahead and emailed my accoutant (beginning to apply pressure to resolve the issue). I contacted the number 2 filing attorney via a thorough email so as to cut past all of the crap and get right to the jist of my last questions.

I plan to see the low cost attorney within a few days to find out what happens $ wise with his firm should I end up converting to a 13 to save my house.

Comments?

Anyone who has originally filed a 7 and then for whatever reason had to move to a 13, PLEASE drop a note my way.

Thanks!

[shygal]

Hi, I have ben reading your posts as well... We are filing ch.7 next week and we have been getting calls like MAD from the cc companies! On any one given day, our caller id box shows 72 calls from citi cards !! Thats CRAZY !! So, be prepared for the calls to start coming in... and always remember things DO get better. I think that you are researching your situation very well, knowledge is power, you know ! Keep us posted, I wish you and your family lots of luck.