Question Dilemma with Credit Union and Attorney

[Johnworker1]

If you haven't read any of my other posts I will summarize that I am in a 100% Chapter 13 after my previous (8%) Chapter 13 was thrown out after my final payment when they saw raises and overtime in my tax returns that I turned in late right before the last hearing (discharge?). I waited a few months to see what will happen since I paid all the payments (received a refund) in the case. After a few months I received a summons to court from one of my creditors (credit union) so filed this time for 100% plan so I wouldn't have to worry about salary limitations and to finally get this over with since I assumed I paid off a large part of my debt in the original plan.

After this filing I had an estimate of 37K in unsecured and a monthly payment of $930 for 40 months. I paid extra occasionally and after the 40 month I requested for a payoff expecting to hear of a surplus and was told I had a payoff of 58K and to contact my attorney. I was told by my attorney that the 37K was an estimate and that there were more claims submitted and I should have kept up with the paperwork the trustee sends out occasionally that details the values of the claims. I continued to pay and worked extra hours to try to save up to pay it off within the next 2 years.

I got to the time to pay off what was due and found out first that after 5 years I was on thin ice because the trustee can throw out my case. Also I finally did the due diligence in research and found out one of creditors (credit union) originally filed a 2 claims for vehicles that they repossessed (in good condition) for the amount of the loan. For months there was a lot of back and forth with my attorney who contested my premises and said that they add in exuberant late fees, penalty and storage charges and the fact they can sell the repossessed vehicles for numbers way under value. At this point my attorney stance was pay or risk getting it thrown out. I tried contacting other attorneys and only one was interested in hearing my story. All the others said nothing can be done just pay it and move on.

This attorney researched my case, filings and my NDC and told me that the credit union listed 0 late fee on the filing and also did not list an auction nor selling price of the repossessed vehicles. He said that is required by law and that an objection to the claim can be filed. He also stated that my original attorney can do this or his firm can. I asked him had he ever seen this before in his practice and he said no so I am troubled at the possibility of being a test case.

My dilemma is do I pay it off so I can finally move on with my financial life and cut my time losses or do I contest the credit union filing. During the time in BK I can't finance property or cars and some secure jobs that perform background checks can consider it a bad mark. And if I contest it do I use my original attorney of 10 years who was already paid to do the job who seems to have lost their competency or hire the one who diligently found the discrepancy in 1 week? If I hire this one there is no set price it will be per hour and seeing this is his first time I risk the hours can add up. The attorney said it will be extremely difficult to get the money I already paid the credit union for those vehicles but I could conceivable be off the hook for the remaining (approx 30k) amount.

I am at a crossroad now and would like to get this over but do not want to do something that I may later regret such as paying too much for a filing or picking another fight in this case that can be prolonged and costly.

[justbroke]

You're going to need an attorney to sort this through. As you wrote, you're going to need to decide if hiring an attorney to analyze the claims further.

I would go back to my original attorney. I don't think this is a competency thing at all. Usually a bank creditor will update the original claim once the auction occurs and the paydown amount is known. It just simply reads that this never happened and only the original claim, for the full balance of the loan, is in PACER. That's normal at the start of the case. If it was a simple oversight of the creditor to not update the claim by filing an updated claim form, then maybe this would be simple, quick, and easy to correct.

That you didn't look at the annual reports from the Trustee is problematic, but I think just getting the claim updated should fix the issue. Have your original attorney simply contact the CU/bank and have them update the claim. If the bank refuses, your attorney should be able to fashion something to compel the CU/bank.

Worse case, by having original attorney go back to the CU... is that they say the claim is right. You've lost nothing at that point. Best case, the CU says "mea culpa" and updates the claim!

[Johnworker1]

You're going to need an attorney to sort this through. As you wrote, you're going to need to decide if hiring an attorney to analyze the claims further.

I would go back to my original attorney.
My original attorney stopped responding to my emails which was our established communication medium. I emailed her saying I would seek other assistance and called and left 2 voicemail messages. She called back after a week and told me that she is semi retired (duh) about to exit the business and dealing with taking care of someone. She again said that my premise of the credit union filing a claim for original amount after auction was incorrect. She went on a long dialogue of penalties, late fees, interest and storage fees then after the upteen time of telling her the numbers she paused then asked me to look up the date of repossession. After I hung up I decided it was time for a new attorney. I contacted a law firm that deals with bankruptcy and I used to be in a social group with the owner who was very nice and professional. Upon my consultation I found that the owner is now retired and there is a new managing attorney who did a zoom conference from the law office to wherever he was. He beat me up also saying that I was making a lot of unsubstantiated assumptions. He did say he could do the research for a fee ($1500). Thinking I had no other options I signed up a got a call in a few days with him saying that he expected me to be wrong but the numbers did not add up. After some more research he found that the claims did not have the paperwork showing the boat was auctioned. He felt that he could file an objection to the claim. I reflected at how much he distrusted me initially and how he was late in every step of process and decided to not use him. I did a research for other lawyers highly acclaimed and found 3 in Bankruptcy and only one responded to me email and sounded very understanding and professional. I hired him but as supplemental attorney to my original.


I don't think this is a competency thing at all. Usually a bank creditor will update the original claim once the auction occurs and the paydown amount is known. It just simply reads that this never happened and only the original claim, for the full balance of the loan, is in PACER. That's normal at the start of the case. If it was a simple oversight of the creditor to not update the claim by filing an updated claim form, then maybe this would be simple, quick, and easy to correct.

The credit union sold the boat after a 3 years of repossession. The closing paperwork (finally got) showed and there was a marina charge of 13K that wasn't detailed for (storage?). There was 10% commission deducted so attorney tried to contact marina for details of the 13K with no response. There was a 10K net from sale that wasn't detailed on the claim filing. The credit union attorney died during this so we had to wait until another attorney took over and when my attorney brought up that there shouldn't be no deficiency there was some back and forth and ultimately a "compromise" that they will modify the claim so I owe nothing else on the boat saving 10K with me paying of the adjusted BK balance as part of my proposal.

That you didn't look at the annual reports from the Trustee is problematic, but I think just getting the claim updated should fix the issue.

That I didn't look at ANY paperwork wise after filing is largely the reason I am where I am at. Whether my attorney had a mere oversight or cut some deal with opposing counsel or anything else I do not know. I sent her an email showing where the new attorney is at in this process and never got a response. Typically no response to me is a sign of guilt lol

Have your original attorney simply contact the CU/bank and have them update the claim. If the bank refuses, your attorney should be able to fashion something to compel the CU/bank.

Compel is what my new attorney did but I had to also compel him. At one point I sensed he doubted there was something wrong even after auditing the paperwork but I reaffirmed my position and he continued to work away.

Worse case, by having original attorney go back to the CU... is that they say the claim is right. You've lost nothing at that point. Best case, the CU says "mea culpa" and updates the claim!

Thanks, your forecasted best case happened and I plan on mailing the adjusted payoff amount to the trustee office this week fingers crossed I'm closer to getting this discharged and over with!

[justbroke]

Thanks, your forecasted best case happened and I plan on mailing the adjusted payoff amount to the trustee office this week fingers crossed I'm closer to getting this discharged and over with!

I'm glad to read that it is moving in the right direction.

[Barbisi]

Wow, Johnworker1, you've had one rough ride! I can't even image two Bk13 terms lasting ten or more years - you deserve your freedom in gigantic spades!
Best of luck on getting this yoke off your neck and back ASAP!

[Johnworker1]

I submitted adjusted payoff and signed a settlement agreement with the creditor (credit union). I was told there will be a trustee audit and once I receive a completion of plan payments I will submit a 522q affidavit for a discharge. All fingers and toes are crossed!

[justbroke]

Excellent.