Hoping for advice - Need to vent

[Alex46]

Hello Everyone!
I'm hoping to vent just a bit, and maybe in the process receive some valuable advice since this community is so great in terms of putting these BK issues into perspective. I don't want to make a rash decision.

To try and summarize:

- My husband and I are one year into a Chapter 13 Bankruptcy.

- We support an elderly parent, however, those expenses were not argued for nor put into our budget. It seems the attorney merely went with the easiest and quickest way to confirmation

- I have an illness that requires a great deal of out of pocket costs, likewise, the attorney only put in a base amount for medical in the budget. This has resulted in me just stopping taking medication simply because I can't afford it

- In essence, it's almost like we can't breath with the plan payment. Don't get me wrong, I do not want to give up and walk away. I'm not saying we can't breath because we can't go out or buy "things" (we don't..we find ways to do things together like hiking, etc. that don't cost money). It's that most days, trying to get the utilities paid on two homes (ours and the parent we are supporting) is nearly impossible. We've cut out almost every imaginable "extra" there is and even with that, we keep feeling the pinch each payday

The last straw, and I almost broke down in tears, was yesterday we met with an attorney. We have been battling with a management company for nearly a year. Due to improperly maintained sewer lines, the parent we support has had raw sewage floods and all the negative effects of that. We've been fighting non-stop. Well, we finally proved that it was THEIR fault, not ours. During that time (four months) we withheld rent and put it in escrow until they fixed the problem.

They called me last week and apologized for what they'd put us through, and said that they would be letting my attorney know what abatement they would be offering. I said "wait, what do you mean? Aren't you going to discuss/negotiate with me?" and he said "no, because you are in a Chapter 13 you have no right to negotiate. We will tell your attorney what we will give you, and he will handle the funds." I was livid.

I contacted the BK attorney. He told me their attorney had already filed a motion to appear because they wanted to take legal action on me not paying the rent. I told him I didn't pay because of the sewage issue, and that I had the money in escrow. He repeated that I had to pay the rent. I said "but what about the sewage problem!" It took three tries and he finally understood and said "oh, well you need to get an attorney to represent you, but you have to pay the rent." (FYI we paid in full that day).

Every attorney I contacted told me because of the BK there was nothing to be done, that my BK attorney had to negotiate. In turn, he (BK attorney) said he would not represent me! Finally, an attorney who knows my BK attorney called me and said "we will file a lawsuit" and had me come in (yesterday).

..and that is where it all goes to heck. We go (mind you, an hour drive)..and the first thing he tells me is that to file a lawsuit, we have to file to lift the automatic stay on the BK. The rent in question, is not even listed in the BK, it is the land on which the house we mortgage sits. Anyway, he says to me that it would cost a fortune and not be worth it. Oh, and he proceeds to berate me for paying the back rent! I told him the BK attorney told me I had to, and he said I should not have done it!

At one point, I mention something about the plan payment and how hard it is to make ends meet, mainly because the BK attorney did not try to get some of the expenses of the elderly parent into the budget and he yelled at me! I kid you not, he told me that unless I was the parent's legal guardian, they are not a dependent!!

I have been desperately trying to find solutions for six months now. We need to get the parent out of the house they are in, but we can't get anyone to rent to us. He only earns a small amount in social security so everyone is denying us, and in order for us to rent or co-sign in our names we have to get trustee permission. The attorney actually just looked at me and said "well, you just have to rent a place for him." I would if I could!

Then..and here is where I finally did want to cry. He tells us that BK lawyers know one thing, BK and that they don't always go the route of what is best for the client. To that end, he says that he thinks we need to walk away from the BK and negotiate with creditors. And surprise surprise..what does he do? yep...creditor negotiation.

I walked out of there shocked, stunned and now I honestly don't know what to do. My husband qualifies for a VA mortgage, but our plan payment puts us at over 50% DTI which automatically disqualifies us. We don't have any extra to save, so no way to save a down payment. Originally we thought we'd try to find something small that we could move into, then move the parent into our home. But, after all of this, I just can't find any viable solutions. All the rentals would make our already tight budget unbearable and according to the BK attorney, any rental agreement we present has to be predicated on the fact that we won't change our plan payment.

Just to explain, but the reason we thought going the VA route is because the mortgage payment would be far lower than the rental costs in our area (at least half what it costs to rent).

I don't want to walk away from the BK. I know we can get through it and the positives outweigh the negatives. But right now, I am so lost. The home the parent is in is a health hazzard and I don't even have the extra money to at least try to start to make repairs on the home.

I did try, a while back, reaching out to other local lawyers to maybe see if one would represent me better in regards to the plan payments. Evidently in this area, everybody knows everyone else, and in many cases all I said is that I was looking into getting a new attorney (and said nothing bad about the other attorney) and some people just very rudely told me "you can't afford me" or "you already have an attorney, there is nothing I can do for you".

I'm sorry for the long post, it's just that I figure I needed to explain all of it to make sense of why I'm feeling dejected and beaten down by this. I'm not going to give up and walk away, but if anyone has any insight I would welcome it!

[justbroke]

This reads as a saga of bankruptcy attorneys that do the easy thing, general litigation attorneys that don't like contingency, and of debtors that are lost because they don't know what is possible (while leaning on those same attorneys to guide them).

You experienced an unfortunate truth which is that your bankruptcy attorney (usually) makes a horrible general litigation attorney (although many do practice in other areas). In other words, you asked a plumber about your electrical. (Okay, that may be a harsh analysis, but in the trades it works for me.) General litigation of that type would typically require a retainer because it's not a class action lawsuit and the question would be how much in damages could you actually recover. Of course hind-sight is 20/20 and I can just sit here and say that I would not have asked my bankruptcy attorney about suing a third party unless I was asking solely for a referral and then to talk about how I notify the Trustee on a potential recovery.

he told me that unless I was the parent's legal guardian, they are not a dependent

I had to make note of this, because this is not true in bankruptcy. In my Chapter 13 I paid for my mother's vehicle and some other expenses. No questions asked by the Trustee. Now I was the "attorney of record" since I was Pro Se (filed and represented myself), but paying for elderly, aging, or sick parents is absolutely possible in a Chapter 13 as an expense. In fact, the Means Test (Form B122-C2, Formerly Form B22-C) has a line for this if you were under the median income. (If you were over, then you'd rely on Schedule J as an additional expense.)

Form B 122C-2 Line 26: Continuing contributions to the care of household or family members. The actual monthly expenses that you will continue to pay for the reasonable and necessary care and support of an elderly, chronically ill, or disabled member of your household or member of your immediate family who is unable to pay for such expenses. These expenses may include contributions to an account of a qualified ABLE program. 26 U.S.C. § 529A(b).

You do, however, need to bring up front proof of what you are paying for at the beginning and (unfortunately) keep reminding your attorney to add those expenses before you sign the petition. (Also take note that I do not claim my parent on my taxes.)

As for the relief from stay for a lawsuit, it's not really that. The fact that there is litigation and a lawsuit for damages (money) would require notification to the Trustee. It doesn't mean that you can't initiate a lawsuit, It means that proceeds may be property of the bankruptcy estate. It gets sticky if this was actually a "pre-petition" claim and you didn't include the potential lawsuit in your schedules as an asset, but that's not a 'real" problem.

Personally I would go back to my current bankruptcy attorney and demand that a Motion to Modify Confirmed Plan be put into place. I would demand that your parent's (reasonable) expense is included and that you add additional money for medication which you stopped taking.

Chapter 13 bankruptcy is not a punishment.

What you learned is that a bankruptcy attorney doesn't necessarily know anything about general litigation on land leases, and that the general attorney (that could help you with the land lease) knows little about bankruptcy.

[Alex46]

Thanks so much for the insight! This has all been so tough trying to manouever, and all I've ever wanted is a clear understanding of the process and how to get through it.

To that end, I was wondering if you might offer me some insight.

We found a brand new manufactured home that we can finance. It requires a down payment, and we are feverishly selling what we have to come up with the down payment. The home is perfect because the cost is reasonable, and then we can move the parent into our old home. Long story short, between the two homes, the cost would be lower than renting locally or buying a stick-built home.

The BK attorney already told me it was ok to apply/go for it. But, he often says (and did in this case) that because we are at 100% payback, the trustee won't object to much. So, it seems that he keeps pushing to keep things at 100%.

But, for the past two weeks we have been in and out of the hospital. My husband's blood pressure was so high, they thought he was having a stroke. So, it's been non-stop trips for tests, etc. dealing with that..and yesterday both the VA and our primary doc said that my husband is going to have to hang up his hat at his current job (law enforcement).

So..now I'm terrified! I haven't told the BK attorney yet. We would lose half our leftover income, and I already know that with the current plan payment, what is left from my salary will barely support one home, let alone two.

Do I tell the attorney now? Do I get the house then ask to modify the plan payment? With him being such a stickler about the 100% payback, do I find a new attorney? I looked at secured vs. unsecured and if we just pay the secured creditors, the payment would be a lot lower. But, again, because the attorney seems so focused on that 100% number, are we doomed?

We are scheduled to go to the new home tomorrow and put the initial down payment to get the approval process done (so we can submit to trustee to approve). That deposit is refundable, but I'm losing my mind deciding whether to even take that step knowing now what we are dealing with and the prospect of the lost income. As it is, my husband's company doesn't have short term disability or even sick leave, so the next few paychecks are really going to be tough as we are going to be down his income anyway!

[justbroke]

You should always keep your attorney informed about a change in expenses. As for purchasing a new home, that's typically allowed if a.) you're in a 100% plan, OR b.) you file a Motion to Incur Debt and this is just a home replacing an existing home. The major key in "incurring new debt" is that it doesn't impact the unsecured creditors (unless it's something that is unavoidable).

What's unavoidable? The existing home's roof collapsed and it's not worth fixing, home burned down, other issues where you really have no "choice" about moving and getting a new home.

I think your major issue is that you're so busy trying to get this new home, that you don't realize that you're "selling" a lot of stuff in order to even afford the down payment. To me, this is an indicator that you may not be ready for this new home. Compound that with your current escalating medical expenses and that creates a scenario where you may actually put yourself in a worse financial situation.

If you can afford a 100% plan, then this is all moot because you literally can do whatever you want (except sell certain property without permission). If you're not in a 100% plan and/or you're in a 100% plan but want to reduce it while incurring new debt, that's a tough position. Any attorney is going to advise you exactly as your attorney has advised you.

You are at a crossroads. It is your financial decision and you need to do something which doesn't have you worrying or struggling. Your attorney will do what you want them to do (so long as it's ethical). If you're paying a down payment then I assume that you intend to stay in the 100% plan and can afford your decision.

Someone will probably come along and say that the loss of your primary source of income will be significant and you shouldn't make significant financial decisions surrounding that transition. I would agree with them..

(Please remember what I wrote above about "continuing" payments to support an aging, elderly or sick parent. The word "continue" implies that you were already making these payments and they are not changing significantly. Unless your "net" expense is near zero (meaning that moving your parent into the "old' home leads to no additional expense, and your new home has a net or neutral expense increase) then you should reconsider this new expense.)

[Alex46]

Thank you (again) for your advice. As far as the house, well, the main reason for hoping/trying to get it, is because the home the parent is in is a health hazard from the raw sewage. The plumbing needs repairs, the flooding that happened caused several floors to rot and are on the verge of collapse...it was basically a way to try and make it a win-win wherein we'd surrender that home back to the plan/creditor so that at least the parent would then be able to live comfortably in our home. The expenses would have actually equaled out because the parent would have paid the lot fee/mortgage on our house much like before, while we handle our house and the utilities/expenses between the two homes.

But you are right in much of what you said. I've been up and down regarding the house, and I realize now it's because I know deep down that one, it's not feasible and two, I'd be making us part with the last bits of things that matter to us...mind you, not financial..but things that hold sentimental value to us. To sell so frantically just makes me physically sick, and probably because I know that I'm most likely going to get us into a deeper financial bind.

So, for now, the goal is to just keep things as is and get through the financial aspects of what may come. Will it be easy, not by a long shot, but we can do it. Plus, knowing in 4 years time we will come away debt free (including student loan debt) is enough impetus to buckle down and do it.

Thanks again, I appreciate it!!