Ch 13 lawyer vs the Ch 7, very different approaches

[Unsure14]

I have met with two attorneys. Two totally different views. One does Ch 7, and was a trustee and the other does Ch 13.
The Ch7, only recommends Ch7, and won't touch our case for 6 + months, because of cash advances 4 months ago. He was wearing his trustee hat, and I couldn't figure out if he represented the CC co's or us. Very scary, and seemed to enjoy giving us every worse case scenario. Said if he was the trustee, he would look for this and that and etc... he was a hound dog.
Ch 13 attorney, said that almost all cases used to be Ch 7 a few years back, and those trustee's are very hungry. He said although we meet the means test for a CH7, he would recommend a 13 cause we wouldn't have to wait to make sure we were not seen as fraudulent. He said he could protect our cash, and a few other things that CH7 trustee's would smell and want us to give to them. This is because we can file Federal homestead exemptions and exempt the cash and all our stuff. He also said, that the payment plan would defer our student loans for three years, and so we wouldn't have to make payments on them. Our car would be part of our payment plan and he estimated the plans total cost would be about $550 a month.. That would be less than our car and student loans. So I think we are going to file 13. He said he is usually very close on his numbers, and said if for some reason he was way off, he would just get us out of it.. that you can do that on a 13, but you can't on a 7.
He said that unless you have charged up an American Express, don't worry about objections... AE is the only one that objects.
He also said that in our area, during the three years plan, they never even check to see if you have earned any more money than what the plan was set up for. In a larger city near us, they check once, around 18 months into it. They don't have time with the number of filings right now.
He also said to stop all payments, stay in the house and short sale when it starts getting hot, about 6 months from now. Otherwise it will foreclose, but almost all his clients have gotten the short sale to go through.
Does this sound about right.

[treehugger1]

"three year plan?" In my district, under the current BK laws, there is no such thing as a 3-year plan, unless the debt will be settled and paid off in three years. If this is not the cse, the plans are five-year plans.

[gymbo]

Go With the 7

I'm not an expert here, but from everything I've read - you always want to try for a 7 if it's at all possible.
The trustee attorney may have been scary - but sounds like he knows exactly how to get you into a 7 with no objections.
Then this is all behind you!!!! (Wouldn't you rather wait 6 months then pay for 3-5 years?)
Good Luck!

[diviaruba]

"three year plan?" In my district, under the current BK laws, there is no such thing as a 3-year plan, unless the debt will be settled and paid off in three years. If this is not the cse, the plans are five-year plans.

Three year plans are available in a 13 for below-median debtors under BAPCPA.

[treehugger1]

Okay, I see that. Especially true if you only have a bit of arrears for mortgage and/or taxes, I suppose. What other reasons might lead to a below the means test debtor filing a 13? Just curious.

[diviaruba]

Okay, I see that. Especially true if you only have a bit of arrears for mortgage and/or taxes, I suppose. What other reasons might lead to a below the means test debtor filing a 13? Just curious.

More assets than exemptions to protect them.

[Cali]

The C7 guy was scary but truthful. I would rather know the what ifs then to have someone sugar coat the whole thing for me.

[southernbelle]

I would also prefer to hear the truth than to have someone tell me what I want to hear and have the trustee rip me to shreds or get caught like a deer in headlights by the UST. I'd listen to this guy because I love dealing with worst case scenario. Worst case means you're prepared for anything.

Granted, his tone might have been gruff, but I'd chalk that up to a personality querk and would take the underlying information to heart. His hound dog attitude was putting the Trustee hat on which means the real Trustee will do the same thing he's doing. If he seems like the type to answer your questions and doesn't cost an arm and a leg, I'd have other consultations, but I'd give that guy a chance.

Just my opinion.

[catalina2225]

I am above median and am on a 3 yr. plan. I will have a lot of unsecured debt that will end up being discharged.

[dragonnfly]

I would definitly try for the 7 you can exempt much of the same stuff in a 7 as a 13. Unless your thrown out for fraud the worse that could happen is you'll be pushed into a 13. Those lawyers like 13s better because it provides them a monthly paycheck. Dragonnfly

[Unsure14]

Thanks for the comments.
Well here is what we decided. The Ch 7 lawyer who had been a trustee, did give us great insight into what the trustee's are looking for, and how they will smell out $10 bucks if they can get it.
Not for us. I have paid in advance on some services, tuition, and have money in the bank that I want to exempt, and the Ch7 guy told me they would come after both of those because of our CC debt.. He said we should give all of our money back to the CC co's, run our bank accounts dry, that would be the right thing to do. (Trustee mentality)Well, I have no plans of standing on a corner with my two kids holding up a cardboard sign. So, I plan to live on the savings and try to get more work.
The Ch13 guy said, I can exempt all the money in the bank, and not to worry about the trustee in a 13. Rarely do you get objections, except AE. He said they are not going to go after things like a 7 would do. So he said, no problem in keeping the money in the bank, no problem with the services you paid ahead for, and you can keep everything you own, and we will reaffirm the car.. and your car payment will be part of the plan and you won't pay more than about $500 a month. You can start now, and not have to wait 6-9 months like the Ch7 lawyer said, and you can short sale your home, and be able to buy a new home a year later. Your student loans will be deferred during the payment plan, so pay on them what you can to keep the interest from getting to high. The payment plan will be less than if I filed a 7 and had to pay the car and the loans. That works for us really well. Plus the Ch13 guy treated us with respect, and didn't assume we were people trying to get away with something. The Ch7 guy looked at what we owned and said, "yep, lots of debt and nothing to show for it". What he didn't realize is that we are not materialistic and have invested in education and our family, not in boats etc.. Everything I have invested in I can pluck right out of this situation and take with me. It shows you that the mentality is always there, that people will look at you and assume you are worthless because you can not pay your bills as planned. This is my first month in my life that I have let a bill go. I don't feel bad, and I don't hold myself accountable either. It is the way the world works, and I refuse to be blamed because I took the candy that the banks teased me with. It worked at the time to do what I needed to do, and I worked very hard to make it work, but it finally broke. Everyone on here has paid their dues in one way or antother, we don't need to be beaten up anymore.
That is my story, and I will let you know if this CH13 guy knows what he is doing???

[Help!]

Unsure14, I think you should hang out here for a while, do some more reading on Ch. 13 plans and ask a lot of questions of those who are in the middle of repayment. It sounds like you are in a bit of a hurry to make up your mind, but you may find out some things about Ch. 13 you really don't like. The Ch. 13 attorney is making this sound way too easy in my opinion. What if you're not able to exempt everything he says you are? Have you looked into and do you understand the exemptions for your state?

The Ch. 7 attorney is giving you the cold hard facts. Although it isn't pleasant to hear all of the things that could go wrong if you filed Ch. 7, it sounds like he is knowledgeable about them. Unless you commit fraud or perjury, the very worst that can happen to a Ch. 7 filing is a motion to dismiss. If that happens, you can turn around and file a motion to convert to Ch. 13. You've lost nothing by trying, and it happens all the time to above median filers.

No matter what you decide, it will be several months before you will have any finality. If you are the type that can't stand uncertainty, know that rushing into decisions about BK can cause you a lot of grief later.

I was so impatient that I didn't even take the time to talk to more than one attorney. I wanted to file, push this thing along and be done with it ASAP. I should have questioned the things this attorney told me, learned from the experiences of others in this forum and timed my filing intelligently. Instead, my case has been an absolute nightmare and it's a miracle it wasn't dismissed. Don't make the same mistakes I've made...

[ssdsco]

Thanks for the comments.
Well here is what we decided. The Ch 7 lawyer who had been a trustee, did give us great insight into what the trustee's are looking for, and how they will smell out $10 bucks if they can get it.
Not for us. I have paid in advance on some services, tuition, and have money in the bank that I want to exempt, and the Ch7 guy told me they would come after both of those because of our CC debt.. He said we should give all of our money back to the CC co's, run our bank accounts dry, that would be the right thing to do. (Trustee mentality)Well, I have no plans of standing on a corner with my two kids holding up a cardboard sign. So, I plan to live on the savings and try to get more work.
The Ch13 guy said, I can exempt all the money in the bank, and not to worry about the trustee in a 13. Rarely do you get objections, except AE. He said they are not going to go after things like a 7 would do. So he said, no problem in keeping the money in the bank, no problem with the services you paid ahead for, and you can keep everything you own, and we will reaffirm the car.. and your car payment will be part of the plan and you won't pay more than about $500 a month. You can start now, and not have to wait 6-9 months like the Ch7 lawyer said, and you can short sale your home, and be able to buy a new home a year later. Your student loans will be deferred during the payment plan, so pay on them what you can to keep the interest from getting to high. The payment plan will be less than if I filed a 7 and had to pay the car and the loans. That works for us really well. Plus the Ch13 guy treated us with respect, and didn't assume we were people trying to get away with something. The Ch7 guy looked at what we owned and said, "yep, lots of debt and nothing to show for it". What he didn't realize is that we are not materialistic and have invested in education and our family, not in boats etc.. Everything I have invested in I can pluck right out of this situation and take with me. It shows you that the mentality is always there, that people will look at you and assume you are worthless because you can not pay your bills as planned. This is my first month in my life that I have let a bill go. I don't feel bad, and I don't hold myself accountable either. It is the way the world works, and I refuse to be blamed because I took the candy that the banks teased me with. It worked at the time to do what I needed to do, and I worked very hard to make it work, but it finally broke. Everyone on here has paid their dues in one way or antother, we don't need to be beaten up anymore.
That is my story, and I will let you know if this CH13 guy knows what he is doing???

I'd strongly recommend you interview more attorneys. Some of the things the 13 guy said just don't make sense, at least to me.

"you can short sale your home, and be able to buy a new home a year later."

[Unsure14]

Hello,
Thanks again for the comments.
I am in a state where I can use the Federal Exemptions or the state. In my case we are going with the Federal, because you can use up to $10,125 pp of unused equity. Since I don't have any equity, I can exempt cash and other things.
I spoke to the para at the office the other day. She was very nice and seemed very knowledgeable. She re-assured me that the house will be part of the BK. The lawyer will be working with the 2 lenders to buy us some time before the foreclosure comes through. Want to live there and save money. If we can short sale it, that works out better for you down the road than a foreclosure on your records does. I am in the business, and have also asked a few others, and they all said that a Ch 13 is better than a 7, and a short sale is much better than a foreclosure, so a 13 with a short sale is the cleanest. Not to say it doesn't hurt your credit, but it looks better when you go to buy another home. As long as you keep your payments up ect...
After talking to the lawyers, the para legals, Lenders, title companies and following this board for months, as well as doing other research, I feel like I am ready. All my questions have been answered, hopefully correctly.
I will be filing tomorrow, I will keep you posted.

[Stilltheone]

Hello,
Thanks again for the comments.
I am in a state where I can use the Federal Exemptions or the state. In my case we are going with the Federal, because you can use up to $10,125 pp of unused equity. Since I don't have any equity, I can exempt cash and other things.
I spoke to the para at the office the other day. She was very nice and seemed very knowledgeable. She re-assured me that the house will be part of the BK. The lawyer will be working with the 2 lenders to buy us some time before the foreclosure comes through. Want to live there and save money. If we can short sale it, that works out better for you down the road than a foreclosure on your records does. I am in the business, and have also asked a few others, and they all said that a Ch 13 is better than a 7, and a short sale is much better than a foreclosure, so a 13 with a short sale is the cleanest. Not to say it doesn't hurt your credit, but it looks better when you go to buy another home. As long as you keep your payments up ect...
After talking to the lawyers, the para legals, Lenders, title companies and following this board for months, as well as doing other research, I feel like I am ready. All my questions have been answered, hopefully correctly.
I will be filing tomorrow, I will keep you posted.

Now, see I was told the exact opposite from a lender. A 7 is viewed as better because you don't have the monthly payment. You're completely debt free.

If it were me, I would've fought hard for the 7, just to have a clean slate and start over without any debt.

Either way, good luck to you!