Had first consult today (with big BK mill type of firm)

[Drazil65]

Appointment was not too bad thanks to this forum and being prepared with all my paperwork and questions. Need some feedback on a couple of things, we are not sure if both of us or only husband will file, we are not behind on anything as of this minute, that will change on tuesday as we are out of credit and out of money (I have our food and gas allotment set aside for the month), we know we need to stop paying on our CC and plan to starting July (will not have a choice if we want to eat), spoke with paralegal only at this "free" consult as she kept pushing the Chp 13. We are sure that we want to go 7 as we would rather not drag this out truthfully. Anyone file 13 and finished, if so what were the benefits to this (aside from the obvious that you payoff creditors)? We have 47,000 in unsecured debt, a primary mortgage already on Ln. Mod for the last year and an out of state rental that we will surrender. We have our second consult with a smaller firm next weds for second opinion. We are starting to build our timeline to plan the filing date, any feedback/advice on coming up with a date?

[tmkats]

Have a decent lawyer run the means test for you on your initial consult and see if you qualify for a 7. Just because you fail the median income level doesen't mean you won't qualify. I am filing a 7 and have to consider my wife's income on the test, but even with that and all of our expenses we/I still passed for a 7.

Lots of these bk mill type firms want a 13 cause it's extra money for them. Any lawyer worth their wait would want you in a 7 and not just push you to a 13 cause it's more money for them. They might cost more, but it will be worth it for you. After you get the second opinion, come back and post and let us know what they said.

[Drazil65]

Thankyou for the comments, we qualify for the 7 hands down as husband is full time student until next May and I am well within the guidelines for the 7. Our next appointment is Weds. 6/22/11 and hopefully we will have some real advice and perhaps a timeline going. We will also miss our very first CC payment this upcoming week (tuesday) ever, this is perhaps the hardest part for us and goes against everything we have ever done in our lives, but it needs to be done! We are having a very hard time with this part...

[IamOld]

Drazil let me echo everyone "above" - our atty actually shows you the software as he goes through the #'s one by one on the computer with explanations, etc. IF you're below the means test and have no real disposable income, did they say 13 because you're behind in your mort? Or they just said it...

The others are right - see what your next consult says!!!!

[Drazil65]

We are not behind in anything at this minute (that changes next week with the CC) and I absolutley have no disposable income being the only one working), we fall $20,000 BELOW the income for a family of 3 in NC, we are 7 no doubt. I am not too sure why the paralegal kept pushing the 13 because we said we are only considering a 7 at least 3 times??? I think she was distracted or something and we felt she had a different agenda. We are surrendering our rental property in Ohio because it is underwater and we want out and we hope to have our house here sold very quickly (pricing it well below appraisal but still FMV) as we have some equitity and would rather deal with that before BK if possible. We will not reaffirm our home here anyway but do not want to drag out our BK if trustee has to sell it. Cannot wait until next consult!

[IamOld]

Best wishes Drazil - that sounds like the best way to go!!!!

We are not behind in anything at this minute (that changes next week with the CC) and I absolutley have no disposable income being the only one working), we fall $20,000 BELOW the income for a family of 3 in NC, we are 7 no doubt. I am not too sure why the paralegal kept pushing the 13 because we said we are only considering a 7 at least 3 times??? I think she was distracted or something and we felt she had a different agenda. We are surrendering our rental property in Ohio because it is underwater and we want out and we hope to have our house here sold very quickly (pricing it well below appraisal but still FMV) as we have some equitity and would rather deal with that before BK if possible. We will not reaffirm our home here anyway but do not want to drag out our BK if trustee has to sell it. Cannot wait until next consult!

[LadyInTheRed]

Drazil65, did you ask the paralegal why she recommended a 13?

The attorney fee may be higher for a 13, but that doesn't mean it's going to be more profitable. A 13 takes more work than a 7. If a firm sets a flat rate, some cases will be more profitable than others regardless of whether they are 13s or 7s.

What concerns me about this firm is that you did not meet with an attorney and the paralegal is giving you legal advice when she recommends a 13. A paralegal should not be giving legal advice, even if she is experienced enough to give the correct advice. I'm glad you are going for another consult and recommend you don't limit yourself to only that one. If somebody else recommends a 13, make sure you ask why they wouldn't recommend a 7. If you leave a consultation not understanding the advice you are given, you aren't getting what you should be from the consultation.

To answer your question, the advantages to filing a 13 are that you can keep non-exempt assets, catch up on arrears for unsecured and priority debt and strip a 2nd mortgage if it is entirely underwater. Based on the info you've given, it sounds like the only one that might apply to you is non-exempt assets. How much equity do you have in your house? Does it fall under your state's homestead exemption? If you sell before filing BK, will you be able to exempt the cash proceeds? If not, will you have time to spend the cash on living expenses and non-exempt assets before you file? When you consult with attorneys, make sure you discuss what you can spend the cash on before filing. For example, will the trustee raise questions if you put money in an IRA shortly before filing?

IMHO, if you can qualify for a 7, you shouldn't file a 13 just to keep non-exempt assets. Filing a 13 when you qualify for a 7 is a good sign that a 13 will be a struggle.

[keepmine]

We are not behind in anything at this minute (that changes next week with the CC) and I absolutley have no disposable income being the only one working), we fall $20,000 BELOW the income for a family of 3 in NC, we are 7 no doubt. I am not too sure why the paralegal kept pushing the 13 because we said we are only considering a 7 at least 3 times??? I think she was distracted or something and we felt she had a different agenda.

Don't get pushed around. If, there is something you don't understand then, demand an explanation.
Just curious and prehaps some of the lawyers can respond but, is a paralegal allowed to express a legal opinion about which chapter a prospective client should file?

[LadyInTheRed]

Don't get pushed around. If, there is something you don't understand then, demand an explanation.
Just curious and prehaps some of the lawyers can respond but, is a paralegal allowed to express a legal opinion about which chapter a prospective client should file?

As a paralegal, I can tell you the answer is a definite no. What chapter to file is legal advice. A paralegal is not allowed to give legal advice.

ETA: If an attorney reviewed all the details, he could then tell the paralegal what to tell the client. In practice, is what likely happens is that the paralegal gathers the info, runs the means test and then tells the attorney what chapter she thinks the client or prospective client should file. But, the attorney should review the paralegal's work and make the final call, before the client is advised.

[Drazil65]

Thank you for all the input and feedback. Before we started the meeting she told us she was a paralegal and could not give us any advice. But then when we would start to ask questions about a 7 or refer to a 7 she would immediately go back to the 13 and even printed out a worksheet with all of our debts and what the monthly payment would be for 5 years. She said she believes that the 13 would work better for us in the long run and would even defer husbands student loans (all private- sallie mae and PNC) which are not scheduled to start until December 2012. We also told her that my husband is filing for sure and we are still deciding whether or not I will file to which she replied that they always recommend that both spouses file at the same time and continued the meeting based on both of us filing. I will make sure the attorney at the next meeting understands exactly what we want to accomplish, glad we are talking to an attorney this tme.

[ValleYum]

Will the proceeds you realize from the sale of your home be exempt in bankruptcy proceedings in NC?? If it is would it be because the cash was realized from the sale of an exempt property?

Because I read that in NC you can exempt 35k in equity (doubled if you file jointly) on a home. You can use 5k of any unused portion of the homestead exemption as a "wild-card".

http://www.legalconsumer.com/bankruptcy/bankruptcy-law.php?ST=NC#homestead

ETA: And if next May, hubby gets a job and you are in a 13 - won't your plan payments be affected by his change of status and income?

[Drazil65]

As we never had the chance to ask the paralegal about the money from the sale (providing there is a sale of course) but this is on the top of my list for our consult next week. Yes, she did say that if we do a 13 any status change in income status would adjust things in a 13. But of course we are not planning to go 13 as we told her 3 different times?

If we both file we can both use our exemptions of course for a total of $70,000 which would cover the equitity of $66,000 but we are not reaffirming and have already been on a modification for the last year. We are not sure we want to keep the payments up and feel it would be best to try to sale ahead of time and spend the money if we have to on whatever we are allowed to. Hopefully the attorney next week will have some good insight on this train of thought.

[mwr]

>spoke with paralegal only at this "free" consult as she kept pushing the Chp 13<

Do yourself a very important favor and drop that mill and get yourself a real (and good) bankruptcy attorney. There are many considerations regarding filing a 7 or 13, and your state's laws regarding exemptions is one of the big factors. An experienced bankruptcy attorney can ask you the relevant questions, sort out your situation, and explain your options and their consequences to you.

[Drazil65]

OK, had the 2nd consult last night with an actual attorney this time and it was like night and day compared to the 1st consult! This guy was right on with his answers and advice and gave us direction with an actual timeline for filing. He discussed both chapters with us as my husband qualifies for a 7 (full time student no income so I am the only one working) but he pointed out where we might benefit with a 13 because of his full time student status (something the paralegal at the 1st consult never did she only pushed the 13 and a very large payment that did not make sense to us). He also enlightened us to the fact that because I am on the deed only for our house here and not the mortgage (we are current on payments and already on a modification since last June) no one can go after the house except the bank that holds the mortgage and only if we default. So here in NC appearently the house is protected and the trustee/or the creditors cannot even look at it, so if we want to keep it in the long run we just need to keep up the payments. He knew his stuff, made us feel very comfortable, told us that we have time as we just missed our first payment this week on one of husbands unsecured creditors and to stop paying all his unsecured debt at this time if we were sure he is going to file at some time. We left there last night with feeling much better about our situation and with a plan for the next few months. He fee is very reasonable ($1240 and if we pay the whole thing within 60 days he will discount by $200) and it was actually a pleasant meeting (if there is such a thing in this instance).