Confused

[Koda1021]

Hello everyone!
As I put in previous posts, I don't have a very helpful BK attorney. Pretty much when I email, I get a curt reply. I am in the process of trying to find another (better) attorney, but for now, was curious if anyone had any input on a few questions I have. Next week, by the way, is the day slated for our confirmation hearing. We haven't gotten any objections to our revised plan, which pushed our payment up to nearly $1,800 each pay period.

1. My mother is 65 and earns $775 a month in social security. This only started last year. I claim her on my taxes, as my CPA says that since her social security pretty much goes to her medical bills and food each month, that because I pay everything for her, I can claim her. Prior to her social security, I paid everything (she lived with me). Now that I'm married, I purchased two homes in a manufactured home community. My mortgage is $280 a month, hers is $290 a month. We do pay lot fees on both (BK attorney said to keep paying those).

It appears that my BK attorney didn't necessarily list her as a dependent (my tax returns go back for at least 15 years showing I pay 100% of her expenses). Instead, he is cramming down her mortgage, and claiming it as "rental property". So, I don't know that her expenses are necessarily figuring into my disposable income. Does anyone have experience with an elderly dependent and how that works with a Chapter 13? Does she have to live with us to be a dependent? My main goal in the Chapter 13 is to keep two things, both houses, and both cars (we have two cars included in the BK). If the trustee isn't seeing my mother as a dependent, I'm fearful they will suggest we relinquish my mother's house. Early in the process, the associate who took over my case, made a flip remark when I talked about my mother's house and said "well, maybe you should just surrender it." Our house is too small, and we don't have an extra room, so my mother moving in isn't feasible. She isn't frail or requiring constant medical attention, so with her social security, there is no way for her to afford a place of her own or a senior citizen home (and between us, I don't want to put her in a home!). Plus, considering the cost of the mortgage now, it is pretty reasonable compared to other options!

2. Medical expenses - I have epilepsy and unfortunately, going the route of generic drugs (I tried at least 12 over the course of the last two years) have caused my issues to get worse. The doctor finally put me on brand name medication which seems to have helped. Trouble is, I have a high deductible health plan through work, so I have to pay $2,500 before my benefits kick in. I explained this to the associate who told me that the $500 per month they put in the plan "was more than reasonable". She could have cared less about the true nature and cost of my illness. I have to refill my medication in two weeks, and the cost is $1,500!! Because the trustee payment is pretty much sucking every last penny out of us, I never had a chance to save for the deductible costs, and I certainly don't have the money to cover the meds (that $500 per month was eaten up by my monthly medical bills). I'm working to find a new neurologist closer to me, and see about other (less expensive) medication options, but I'm still going to have several hundred dollars worth of MRI's and doctor's visits during that time.

So, should the associate be arguing for more income towards my medical expenses?

3. My husband - a while ago, he thought he was going to lose his job. That didn't happen (thankfully). But, last month he was rushed to the hospital. They thought he was having a stroke. It turned out his blood pressure was so high, he was borderline stroke. He sustained kidney damage from the episode.

His physician put him on blood pressure medication, but in his follow up two weeks ago, the doctor said that his blood pressure was still very high. Because my husband's job is a very high-stress one..the doctor basically said "quit your job or you will have a stroke". He even went so far as to say that he would write a letter to his employer that he could no longer perform his job duties to full expectations. If my husband does have to leave his job, obviously our income is going to be severely reduced until he is able to find another job. I ran the numbers, and on my salary alone, with the current trustee payment, we don't have enough to pay the trustee, and sustain both our expenses and my mother.

The reason I'm concerned, is if the associate didn't list my mother as a dependent, that the trustee is going to come back and say the plan payment can't be changed, and instead, my mother and her expenses should be dumped to maintain the current plan payment..or worse yet, that the car and home she has have to be surrendered (both are in my name). Should my attorney/associate be making an argument about this?

Since confirmation is next week, I'm at a loss. Do I let the confirmation happen, since it appears that it is finally going to get confirmed (we started this process back in September)..and then find a better attorney who can change the terms of the plan? Or, do I find an attorney now, get the confirmation adjourned, and try to argue these points (if it is possible) before the confirmation?

Thanks in advance for any insight!

[LadyInTheRed]

I am not sure, but I think it is easier to modify your plan before it is confirmed than after. Unfortunately, this could delay your confirmation which sucks since you are in Michigan. But, you need to have a plan you can live with. Switching attorneys right now does not seem realistic with a confirmation hearing coming up next week. I suggest you start insisting your attorney listen to and address your concerns. You may have to start being a pest. But, if that's what you have to do to get the service you are paying for, so be it. Remember that the attorney has many clients and probably is no longer very focused on the details of your budget. She knows there is a confirmation hearing coming up and that there have been no objections to the amended plan and so thinks everything is okay. This is YOUR only BK case. It is up to you to make very clear that everything is not okay.

I am assuming that the reason for increasing the original plan payment was not to cover the value of non-exempt assets, arrears on secured debt or other minimum amounts that have to be paid in your plan. If that assumption is incorrect, then the conversation would change.

I found your other post which includes the following:

Well, after that, he handed my case off to an associate. Since that time, I honestly get no input or explanations from her. Not long after filing, we received a letter regarding the trustee objections. I sent her an email explaining some of the points the trustee made (and their rebuttal). Her response was a one sentence response that rarely are Chapter 13's confirmed on the first go around and that we would have to change the plan (which we did, and raised the plan payment to a much higher amount). I should stress, I don't need my hand held, and I do my best not to bug the Associate. But at the same time, it would really help to have an understanding of this process and how it works. Something I haven't gotten from day one when this person took over. Also, I have $500 slated towards medical expenses each month (my epilepsy) that money goes very fast between my meds and doctor visits (an MRI costs me out of pocket $200!). My insurance deductible is $2,500 so I asked the associate how this works. If all my allotted money is going towards the existing medication/treatment, how do I save money for the deductible. On the first of the year, my medications total nearly $1,500! She told me that she felt my monthly medical allotment was actually quite generous and that she didn't understand the issue I was making of it! (easy to say when she doesn't understand the medications and doctors I have to deal with, as my seizures are not under control!)

It doesn't matter what the attorney thinks seems generous. What matters is what you can document. My attorney warned me that my medical expenses were a bit high and that I should be ready to document them if the trustee asks. The trustee never asked. As soon as you are done reading this, gather evidence of your medical expenses from the last 6 months or, better yet, 1 year. If the costs of your medication have increased, add the monthly increase to the average. Don't forget to add the costs of your husband's new prescriptions. If the average monthly expense is more than $500, scan your evidence and email it to your attorney right away and insist that your plan be modified to include your actual expenses and any increases you can reasonably expect. Also include a simple monthly list of your expenses and expected increases and show your math on how you get your monthly figure. There is no need to specifically list each medication. That is confidential information that is protected under Federal law. Just list your monthly expenses by category like prescriptions, doctor visits, etc. Then call the attorney first thing Monday morning to follow up on the email. Be polite but very firm and insist that the calculation of your plan payment include your actual medical expenses.

If your husband needs to quit his job to keep it from killing him, then he should quit his job. Tell the attorney about that in the email too. I am not certain you can use the reduced income to lower the plan payment yet, but it should at a minimum be a justification for a modification later. If the associate won't work with you to make a reasonable plan, then email or call the partner you first met with. Given what you said about his failure to listen to you before, communicating in writing may be best. But, with a confirmation hearing coming up next week, be sure to follow up emails with calls to make sure you get them to take action right away.

In the meantime, talk to other attorneys. It may be difficult to get them to give you any real good advice when you already have an attorney, but it is worth a try. One thing to consider and talk to your current attorney about as well as prospective replacements, is whether you could convert to a Chap 7 if your husband quits his job and doesn't find another one or a new job pays a lot less. It also might make sense to get your Chap 13 dismissed and file a Chap 7 based on your husband's new income. That would make finding a new attorney a lot easier, but there could be other downsides that outweigh that.

[LadyInTheRed]

I did a little research about support for your mother. Bankruptcy Code Section 1325(b)(2)(A)(i) defines disposable income as your income less reasonable expenditures to support your dependents. My understanding is that the definition of dependents varies by court, but in most courts if somebody qualifies as a dependent on your tax return, they qualify for BK purposes. Section 1325(b)(2)(A)(ii) defines reasonable for over median filers as the expenses under Bankruptcy Code Section 707(b)(2)(A)&(B) which are the national standards plus other things including:

the continuation of actual expenses paid by the debtor that are reasonable and necessary for care and support of an elderly, chronically ill, or disabled household member or member of the debtor’s immediate family (including parents, grandparents, siblings, children, and grandchildren of the debtor, the dependents of the debtor, and the spouse of the debtor in a joint case who is not a dependent) and who is unable to pay for such reasonable and necessary expenses.

So even if your mother is not considered a dependent, you can deduct the expenses you pay for her if you can show that she cannot afford to support herself.

Also, back to the medical expenses for a moment. The National Standard for out of pocket health care expenses is $60 per month if under 65 and $144 per month if over 65. However, you can exceed national standards. The following is from the US Trustee Website:

If the IRS determines that the facts and circumstances of a taxpayer’s situation indicate that using the standards is inadequate to provide for basic living expenses, we may allow for actual expenses. However, taxpayers must provide documentation that supports a determination that using national and local expense standards leaves them an inadequate means of providing for basic living expenses.

I suggest you go over the expenses on your schedule J and note wherever they are lower than your actual documentable expenses. Then insist your attorney include the higher expenses in the calculation of your plan payment unless she can give you a good reason other than "the trustee will object". If the trustee objects and you can't resolve those objections and end up with a livable plan, then you you should insist your attorney take your argument to the judge.

[justbroke]

I'm in Florida and the Chapter 13 Trustee questioned my third vehicle, but it's for my mother. My mother is older than dirt... just kidding. After the Trustee found that it was for the "support of welfare of a dependent", the inquiry went away and I had no problem having a 3rd car.

[Koda1021]

Thanks for all the great advice and insight! My apologies for not replying sooner, it's just been one heck of a few weeks for us. Go figure, but the confirmation hearing was scheduled for today, and on Tuesday, I got an email from the Associate stating that the plan was confirmed and we don't have to go to court today. I'll admit I breathed a huge sigh of relief to finally have the clock ticking.

My husband did a lot of soul searching, and truth is, he's just not a quitter. He felt that he could handle it, and that he could somehow get things to a more reasonable place with work. But..He called me just now quite upset. To explain, his site (he is a security supervisor) is located way at the lower border of Michigan. It is a long drive for many people, and truth is, the officer pay is very very low (the client sets the rate and a contract is negotiated, so no room for increasing pay to get more qualified people). He has had (I kid you not) people come to the site and quit within an hour. Every new person brought on has walked off (they say it's way too far and not good enough pay). Today, two new people that were supposed to show up, just outright quit before even getting there. So, my husband is the one stuck filling these holes and working two and three shifts at a time!

Anyway, he called me and said "I think the writing is on the wall with my health". He has been quiet lately, way more tired, and having very severe headaches nearly daily. As I told him, his health is what matters most to me..and he NEEDS to do what is best for him.

I just sent an email to the Associate explaining this and asking her what the options were. So, we will see. I may start calling around to other attorneys to see if I can get a better insight into what to do.

As far as Chapter 7 as some have mentioned...I wish we could convert. Trouble is A) I earn too much and B) I had to file Chapter 7 six years ago when I was first diagnosed with epilepsy. I had four different hospital visits, countless MRI's, etc. and my medical bills skyrocketed to nearly 10k in just a few months. So, 7 was really the only thing I could do at the time to avoid losing everything. So, my understanding is that I can't file 7 for seven years, correct?

So, for now..I just have to wait and see what happens with my husband. He's going to talk with his boss today and explain what is happening. I don't know if they will offer him another position, but there may not be one to be had. But I figure no matter what, we'll just have to figure it out!

[Koda1021]

So, wanted to follow up really quickly. The Associate wrote me back and said that the trustee only approved the plan because we are paying back 100% of our creditors. Here is what she said exactly:

You would not be able to keep both houses. And your case was able to be confirmed because you agreed to pay your creditors 100%. If it is not 100% then the trustee will have additional objections and issues with any modification.
If he decides to look for another job or finds another job or quits the current job due to the working conditions then let our office know and we can work with you on what options you may have. I would assume that he would try and find other employment.

Either way, to keep both homes you will need to pay creditors 100% as the retention of the home for your mother is what is called a drain on the estate.

So, how can the retention of the home be considered a drain on the estate? Since my mother is a dependent, this doesn't make sense (and goes to my point that they listed it as a rental property!!)

[159515951]

So, how can the retention of the home be considered a drain on the estate? Since my mother is a dependent, this doesn't make sense (and goes to my point that they listed it as a rental property!!)

It would be considered a drag on the estate because it's a second property that is not earning income -- it's no different than claiming your dependent college-aged adult son needs a home of his own, and expecting the court to buy that argument. It's great that you're helping your mom, but your creditors aren't obligated to accept less in order for your mom to have a place of her own. As long as your plan is a 100% plan, this shouldn't be an issue.

It sounds to me like your priorities right now should be: 1) find another job for your husband, unless he can claim disability; and 2) with this being your 2nd bankruptcy in 7 years, make whatever lifestyle changes necessary to make sure this never happens again. You indicated your Plan payment is $1,800 -- that speaks to a significant amount of debt racked up, and a desperate need for changes.

Not a lecture, just real words from someone who has been there. Good luck.

[LadyInTheRed]

Do you have non-exempt equity in either home? If so, how much? Non exempt equity could be a reason you have to pay 100% of unsecured debt.

I am not an attorney and this is only an assumption, but I would think that if all expenses related to the maintenance of your mother's home are not more than what it would cost for her to rent, then the expenses could be considered support of your mother. Calling it a rental property makes no sense. You are not renting it, you are using it to support an elderly immediate family member in need of support. Have you specifically raised that aspect with your attorney and mention the code section I quoted above: 11 U.S.C. 707(b)(2)(A)(ii)(II)?

[Koda1021]

It would be considered a drag on the estate because it's a second property that is not earning income -- it's no different than claiming your dependent college-aged adult son needs a home of his own, and expecting the court to buy that argument. It's great that you're helping your mom, but your creditors aren't obligated to accept less in order for your mom to have a place of her own. As long as your plan is a 100% plan, this shouldn't be an issue.

It sounds to me like your priorities right now should be: 1) find another job for your husband, unless he can claim disability; and 2) with this being your 2nd bankruptcy in 7 years, make whatever lifestyle changes necessary to make sure this never happens again. You indicated your Plan payment is $1,800 -- that speaks to a significant amount of debt racked up, and a desperate need for changes.

Not a lecture, just real words from someone who has been there. Good luck.

I understand what you are saying, and if my issues were related to excessive credit card debt, I would fully own that. However, as I explained above, a good portion of our issues are related to my medical expenses. Epilepsy is something without cure. I am going to have to be on medication my entire life. Those medications are not cheap. Even generic drugs run $200 to $300 monthly.

That said, when we moved to Michigan, the job my husband was supposed to get fell through (they just outright decided to eliminate the position). So, for a time, I was the sole support for all of us. Then, within two weeks, wound up in the hospital (I had a seizure and stopped breathing). That bill alone equaled $2,800 between the MRIs and other tests. Then, my husband ended up in the ER with an emergency appendectomy. The bill for that, $4,400.

Over the course of the last three years, I have been in the hospital on average every three months or so. I've been on no less than two dozen medications. Several had pretty bad repercussions (one put me in the hospital with such dangerously low blood sodium that I was on the verge of a stroke). The medication that finally worked, was a brand name (generics are an issue for epileptics. Because the active ingredient can be either 80% to 130%, it can create problems when trying to regulate the brain and seizure activity). Well, that brand name costs $600 a month.

So, when the medications became an issue, we honestly had to sit down and agree that we either paid the creditors, or continued to pay for my medication..and we chose the latter. I tried to negotiate with creditors, who all told me to get bent.

The reason the plan payment is so high (it was nearly half that originally) is because the trustee would not allow any expenses related to my mother. In the wintertime, gas runs $300 on average a month (even with the thermostat set at 69 degrees). Our homes are also manufactured homes (yes, double-wides). Our mortgage is 292 a month, my mother's is 228. The cost/value on both are less than 15k. Besides the houses, we have two cars. Michigan is a no-fault state, so auto insurance here is nearly triple what it is in many other states. That's it. We don't go out to eat, or go out to do anything for that matter. I work from home, so I haven't bought a single clothing item in the past three years (I have three pairs of sweats and three t-shirts that I wear and wash). We don't have cable, only internet (because I work from home). So, while I understand what you are saying, in all honesty, my illness and care have really been the main focus of our drain. We have cut nearly everything that can be cut (and did this the last three years). It was the creditors from the medical bills that finally wound up pushing us into chapter 13.

I understand what you are saying about my mother, but she has been my dependent for 15 years. The IRS views her as a dependent, and I've claimed her for fifteen years. Based on what others have posted, there should be reasonable ability made to include some expenses related to her, but the associate basically told me to shut up and accept the payment so I could get confirmed.

I spend nearly every day pouring over spreadsheets I've created of the budget. Anywhere I see a penny that can be cut, I do it. We are down to basically the mortgage payment, lot fees, utilities and insurance. But because of the plan the associate worked up, we barely have anything left over, and especially nothing left should another emergency arise (medical, home repair, etc.)

[Koda1021]

Do you have non-exempt equity in either home? If so, how much? Non exempt equity could be a reason you have to pay 100% of unsecured debt.

I am not an attorney and this is only an assumption, but I would think that if all expenses related to the maintenance of your mother's home are not more than what it would cost for her to rent, then the expenses could be considered support of your mother. Calling it a rental property makes no sense. You are not renting it, you are using it to support an elderly immediate family member in need of support. Have you specifically raised that aspect with your attorney and mention the code section I quoted above: 11 U.S.C. 707(b)(2)(A)(ii)(II)?

There is no equity in the home whatsoever. It was put on the market as a "fixer-upper" and trust me..it is. The previous owner was a hoarder who had six children. There are holes in the wall, no plumbing in the master bath. It's a mess, but they agreed to let us mortgage it. The associate added my mother's mortgage as a cram-down (which I'm not sure I understand) and the mortgage company came back claiming the house was worth 25k! Only when we sent pictures of the condition of the home, did the mortgage company attorney suddenly say "umm..yeah..ok, we get it. How about we agree on 11k?"

Every time I try to talk to the associate about my mother and those expenses, she more or less shuts me down (not unlike the above that I quoted). She basically just says that if I'm to get confirmed, I have to accept this payment and be quiet.

[LadyInTheRed]

I think you should send a letter to the partner asking him to review the case, stressing that your mother is your dependent. Akso, start calling other law firms and ask if they are willing to give you a second opinion on your case.

[Koda1021]

Thought I would share something interesting that has developed in regards to our case. As I mentioned previously, I've gotten (honestly) no halfway decent customer service from the attorney or his firm. I'm lucky to get a one or two sentence reply to my emails from the associate.

Two days ago I received a letter from the attorney stating that they would be submitting the attached documents to the court, and that there was nothing I needed to do, however, my plan payment would most likely increase. The amount of the increase isn't that major ($30) but in looking at the attached documents, every single time I emailed with a question or clarification, they listed it..worse yet, they listed it as 20 minute increments. So even though I got a one or two sentence reply, they billed it at 20 minutes!

The attorney never told me that during (or after confirmation) that his services were being billed and that those services may incur extra costs. So, getting this was quite shocking to me. It isn't that I don't think they should get paid, but when we were filing with him his specific words were "after the initial deposit you pay, you will pay nothing more, as the trustee will be paying us".

Uggh..I haven't had a chance to research other local firms to take over my case, but now that things have died down, I'm going to start searching in earnest.

[justbroke]

Most attorneys build at 0.20 hourly increments (which is 12 minutes). Your professional services agreement should have outlined what's in the "no look" fee and what is additional. Typically, everything up to confirmation (excluding certain "a la carte" items) is included in the base fee. Anything else, and I mean anything else, is billed in the increments. And yes, you must bite your tongue sometimes and not send several emails on the same topic. Even if you call, it's .20 hourly increments.

As Lady wrote, you can also get some opinions from other attorneys (hopefully as a free consult).

[159515951]

If you want them to bill less, make sure your emails are concise. I could see an attorney billing 30 minutes (AT LEAST!) if your email to them looked anything like your posts in this thread.

[LadyInTheRed]

Most attorneys build at 0.20 hourly increments (which is 12 minutes). Your professional services agreement should have outlined what's in the "no look" fee and what is additional. Typically, everything up to confirmation (excluding certain "a la carte" items) is included in the base fee. Anything else, and I mean anything else, is billed in the increments. And yes, you must bite your tongue sometimes and not send several emails on the same topic. Even if you call, it's .20 hourly increments.

Every firm I have worked for bills in 6 minute increments as did my BK attorney. Maybe customs vary in different states. A 6 minute entry is very rare. Little can be accomplished in 6 minutes. Even to answer a simple question by email, the attorney must read the email, review relevant information in the client file, think about the answer, draft the response and then review and edit it to make sure it is correct. That is usually going to take more than 6 minutes, even for a simple question that doesn't require any legal research.