Advice Please

[georgia]

Hi I have a few questions I will try to be brief (Iam suffering from information overload at the moment)

1. I have just had a free consult with lawyer it was very quick ( he has all kinds of ratings and good credentials 30 yrs experience ) I really liked him but I think it was because he was telling me what I wanted to hear. I have never had to hire a lawyer before so I don't know what their motivation is. I am not sure if they lure you in thinking you can get a chapter 7 and once they get your retainer (which was very high $3500) they say oops your a 13. He does mention on his website that you get what you pay for I don't know if that means he has tricks up his sleeve.

2. The situation
Arizona
married filing jointly
Income: $ 82,620 (about $20,000) over medium family of 3
House Loan $216,000 2cnd $25,000 Total $241,500 (ZILLOW) shows house at $85,000
We have an older car that will almost be paid off if we file in a couple of months
Car # 2 owe $13,500 KBB is $7600 (upside down)
Credit Cards are $43,500

3. Lawyer says surrender house and car. Which we have no problem with. Our House is the motivation for all this with it being underwater and needing a new A/C soon about $6000 we were quoted (sorry but you can not live in this part of arizona without A/C). We are maxed out. We have been about $400 short for the last few months. I can't imagine anyone giving us new credit for the A/C and I can not squeeze another bill in my budget. Our house is thru a VA Loan so they would sue us if we just walked away.

4. We passed the means test but my whole issue for this posting is Schedule J it shows anywhere from $900 To $1300 leftover I have done all kinds of scenarios. My issue with the Lawyer is he says 7 of course that is not in writing, but from research on the schedule J you should not use amounts that would be surrenderd.

5. We are 40 and 45 years old. If we were put into a 13 that would mean another 5 years of not saving for retirement (we have $2,000 in a 401K) that is it we stopped contributing a year ago. What happens if you need a plane ticket. We have elderly parents in other states?. Our almost paid for car is over 8 years old and has been getting about $1500 ayear in repairs last couple of years. We need 2 cars our son goes to a school out of the district and they do not provide transportation.

6. Do you think Lawyer was feeding me a bunch of bull or could this possibly be a chapter 7?

[jsofaz]

Hi. I am such a newbie myself that I don't have any answers for you. I just wanted to ask you if this is the only lawyer you have talked to. It's really best if you talk to several. I'm in the Phoenix area and just filed Chapter 7 myself. $3500 sounds very high for a Chapter 7 to me. We paid $1650 plus filing fees and counseling fees. So it ended up being around $2000 for us. My mother used a different lawyer and paid $1700 total. Hers included the filing and counseling fees. You might want to check around.

[georgia]

jsofaz,
Thanks for the reply, We will set up some more consults
I just need to get over the shock of telling all my private info
I was thinking the price he quoted was already a 13 in his mind.
Maybe Iam misinformed about a 13 but it makes no sense to me to be under someones thumb for 5 years, when Iam giving up all the assets (house & car)
I dont want to go thru all this to be on a strict budget with no room for real life emergency's, I have been doing that on my own for the last 18 years

[BobMango]

Even if you pass the means test, in most cases you will need to have less than about $165 DMI to be successful in a Chapter 7.

$3500 seems high for a Chapter 7, unless the attorney is expecting to have to fight for it and has included those services in his fee. I paid $1K to my attorney for the bankruptcy, then the filing fee and ended up paying another $135 to the attorney for a reaffirmation agreement. Total was around $1,500.

I would agree about surrendering the house and car, no reason to keep those anchors in your life.

I was a bit depressed when thinking about the situation I found myself in, being in the same age range and having my retirement wiped out. Then I started thinking about the amount of debt I discharged and I'm actually ahead in terms of net worth. In fact, my net worth went way up after I filed. If I hadn't filed I would probably not have paid off the debt in the next 20 years, particularly after taking a 50% cut in income. We gave up a rental property and 5th wheel and I don't miss either. In hindsight I would have filed earlier and saved much of my retirement and been that much better off.

[SMinGA]

My first impressions... $3500 sounds high for a ch. 7. IT might be normal for where you are, or for higher than median filers.

There are a couple of ways you could play things... Use the home loan & car payment to get you to the end of a ch. 7. INstead of reaffirming, try to 'retain and pay' and then after discharge stop paying mortgage. Save money for a move to a rental & to pay cash for transportation - then also stop paying and return the car. (Foreclosure time varies state to state. You might have 4-6 months of no mortgage payments, you might have 1-2 years before you have to move.)

Or you could stop paying mortgage now, save money to move in the next 4-6 months, and file with new living expenses on schedule J. Could be difficult to do a ch. 7 in that situation.

On the other hand, having 401k deductions (reasonable %) is not generally a problem for ch. 7 or 13. IF you're sure you are going to file one way or another, stop paying credit cards & start contributing. Starting them now - perhaps in the 5-10% range - would use up some net income and then you'd have a history of those deductions. Which you should have been doing all along but could not afford.