Attorney Promises... Does this sound right?

[ichb]

I met with lawyer number 2 today and here is what he told me. I just want to see if this stuff seems plausible.

If we file a chapter 13 bankruptcy:
1. We can keep all of an inheritance that we will be getting, we don't know when exactly, it has to do with when a house sells. It's not very large but large enough.

2. We can "re-write" our auto loans and spread the payments out through the plan to get some more disposable income. I am aware that liens and collateral interests do not get discharged through either type of bankruptcy. We were told that if we wanted to do this to stop paying the auto loans and put this money to better use for now.

3. That we will pay our current student loans through the plan and that they will get most of the money paid in. And our unsecured credit card and loan debt will be discharged at the end of the plan.

4. The amount we would have to pay through the plan is a little bit less than our actual non-secured debt (not including student loans). Amounting to about 25000 - 30000 over 5 years.

5. Total fees would be around 2400 up front and 1000 in the plan all inclusive for all regular filing, paperwork and appearances. This does not include work done for objections, amendments, or other "out of the ordinary" things that might arise.

BTW I would be filing in Vermont.

Thank you all for your help.

[arkienurse]

I met with lawyer number 2 today and here is what he told me. I just want to see if this stuff seems plausible.

If we file a chapter 13 bankruptcy:
1. We can keep all of an inheritance that we will be getting, we don't know when exactly, it has to do with when a house sells. It's not very large but large enough.

Be very wary of this one. It is my understanding, that even if you are in a 100%payback, the trustee still usually takes any inheritance. (someone correct me if i am wrong on this one)

2. We can "re-write" our auto loans and spread the payments out through the plan to get some more disposable income. I am aware that liens and collateral interests do not get discharged through either type of bankruptcy. We were told that if we wanted to do this to stop paying the auto loans and put this money to better use for now.

never heard this one either.

3. That we will pay our current student loans through the plan and that they will get most of the money paid in. And our unsecured credit card and loan debt will be discharged at the end of the plan.

I thought most plans post bk reform were holding the student loan payments until the bk is done?? Yes your cc debt will be discharged at the end of the bk. As would any unsecured loan debt remaining. You do know tht student loans are non dischargeable?

4. The amount we would have to pay through the plan is a little bit less than our actual non-secured debt (not including student loans). Amounting to about 25000 - 30000 over 5 years.

5. Total fees would be around 2400 up front and 1000 in the plan all inclusive for all regular filing, paperwork and appearances. This does not include work done for objections, amendments, or other "out of the ordinary" things that might arise.

BTW I would be filing in Vermont.

Thank you all for your help.

Fees sound about right, but I would definitely still seek out as many other lawyer opinions as you can. The right lawyer can make or break a plan. And especially your first 2 statements make me nervous for you.

[rrockinggramma]

It is possible that your attorney is exempting your inheritance in some way. Perhaps to double check, you should run this by a third attorney. If your car loans are over 910 since purchase then they can be crammed down in your plan t FMV and the FMV of your car is paid as secured and the rest is unsecured. Student loans will be paid in the plan but at the percentage that other unsecured creditors are. You can make extra payments on them as your chapter 13 progresses to get them done in the 5 year time span. But since you are aware of the inheritance and have disclosed it, I am wondering if your attorney hasn't exempted it in your plan. GL

[ichb]

Thank you so much.. I'll check another Lawyer or two.

Thank you for your replies.

A bunch of the stuff he said sounded too good to be true. I'll check with another attorney or two and see what they have to say. I'll also e-mail this guy, I liked him and he's right around the corner. I'll have him clarify these points for me.

I don't know what 910 means.

I do know that the student loans will have to continue to be paid after the bk and that they cannot be discharged.

I'm so glad you guys are here.

[Dirk Squarejaw]

I don't know what 910 means.

If the loan is more than 910 days old, then you can do a cram-down.

[kmb]

I do know that my student loans are included in our payment plan, and they are receiving more than half of what we'll be paying in over the course of the 5 years. I had undergrad and grad school loans that total in the six figures, and they receive about 60% of my monthly payment to the trustee. It will nice to have them paid down when we finish the plan, as hopefully the payments won't be too high when I start paying them again on my own.

[ichb]

Just got a reply from atty.

Thanks for all the great info.

I asked the atty to reiterate the info about the car loans and inheritance. It was less than an hour before he e-mailed me back. Points for him.

He said that the auto loans can be refinanced at 7% interest for 5 years thus lowering my monthly payments and creating more disposable income.

He said that the trustee would not take the inheritance under a chapter 13. Maybe it's a Vermont thing. I'll keep researching though.

ichb

[deadbrokeinnc]

If the loan is more than 910 days old, then you can do a cram-down.

What's a cram-down??

[rrockinggramma]

A cram down is done on a vehicle (loan older than 910 days) where you are upside down in the loan. The secured portion is figured at FMV and then the difference between the FMV and what you actually owe is paid like it was an unsecured creditor. So a 10,000 loan on a car worth only 3,000 means that the secured creditor gets 3000 (plus interest) and the remaining 7000 is paid like any other unsecured creditor and the difference is discharged at the end of your plan.

[arkienurse]

A cram down is done on a vehicle (loan older than 910 days) where you are upside down in the loan. The secured portion is figured at FMV and then the difference between the FMV and what you actually owe is paid like it was an unsecured creditor. So a 10,000 loan on a car worth only 3,000 means that the secured creditor gets 3000 (plus interest) and the remaining 7000 is paid like any other unsecured creditor and the difference is discharged at the end of your plan.

OHHHHH, that is what a cram down is. We did that with our van, but didnt' realize that is what it was called.

[HHM]

To clarify the inheritance thing...

The attorney is correct, you would get to keep the inheritance just like you get to keep any other exempt and "non-exempt" asset in a chapter 13. Inheritance is a cash "asset", it is not "income" in a chapter 13 sense, it is no different than a 401K, savings account, stocks etc...you can KEEP all those assets in a chapter 13.

The inheritance only plays a role in the chapter 13 when it comes to calculating the liquidation value of the estate.

Everything that attorney told you is on the up-and-up.

[Flamingo]

A cram down is done on a vehicle (loan older than 910 days) where you are upside down in the loan. The secured portion is figured at FMV and then the difference between the FMV and what you actually owe is paid like it was an unsecured creditor. So a 10,000 loan on a car worth only 3,000 means that the secured creditor gets 3000 (plus interest) and the remaining 7000 is paid like any other unsecured creditor and the difference is discharged at the end of your plan.

Maybe I am misreading your wording in your last sentence but in our cram down of two vehicles in our 13, we only paid the secured FMV value of our vehicles at the time of filing (our attorney included some interest to keep them happy) and the FMV was listed on our matrix as the amount that was being paid back over the plan not the original amount due on the loan at that time. The difference between the FMV and the total amount due on the loan was not included. Both our vehicles at the time of filing were three years old and both had 5 year loans.

[Flamingo]

I met with lawyer number 2 today and here is what he told me. I just want to see if this stuff seems plausible.

If we file a chapter 13 bankruptcy:
1. We can keep all of an inheritance that we will be getting, we don't know when exactly, it has to do with when a house sells. It's not very large but large enough.

Watch this one and be careful and if you retain this attorney, get that in writing somewhere. When you receive an inheritance during a Chapter 13, also hit the lottery or get a large windfall of some sort, that is money that is part of your BK estate during your Chapter 13 and falls in the realm of the trustee's control of your finances during that time. Our plan clearly stated that we had to report any such incoming funds (inheritances included) and we went through an inheritance issues during our 13. Due to the amount of the inheritance after distribution that my husband would receive (mostly from life insurance funds), the trustee did not want it. It was not a large amount. A larger amount may be an issue. Get clear instructions on this if your inheritance should occur during your Plan years so that you do not run into a problem if you keep it. Your protection is having that written in your Plan and having that written assurance to fall back on.

What occurs for some people in a Chapter 13 may not apply to you and vice versa. When in doubt before you retain this attorney, consult with one or two more. Then you will have more reassurance as to your situation.

[ichb]

Many Thanks!!

I want to thank everyone who posted on this issue. We have decided to NOT hire this particular atty. We had asked a friend who worked in a law firm to recommend someone for us and they didn't have anyone but told us to not go to this guy, and they didn't even know we had been to see him.

We will be getting EVERYTHING in writing.

[CindyLou]

My parent wrote my brother out of their estate completely before he entered his chapter 13! With his knowledge of course. When he's done they will change their will.