Confused...

[dp2008]

Hi--

The is my first post. My husband and I will file a BK13 on May 1st in Chicago, but I'm not sure about our attorney. I met her in November with a preliminary budget (I threw it together in an hour) and had good vibes. We paid 1/2 of the fee ($1750) on January 1st. We dropped off the records she requested, but she didn't ask us to fill out a budget or any forms. She called last week and gave us a monthly payment figure of around $3300.00 per month. I questioned the number and she said she had used the IRS means test expenses and it didn't matter what our actual expenses were. She said we shouldn't file if we didn't like the numbers.

We're at a lost. I set up a meeting for next week and asked her office to mail us copies. I was told "we don't do that." She's a fast talker and doesn't allow us finish a question. My husband called and pinned her down and she reluctantly agreed to send us copies. My questions:

1. Is it true that the 2005 federal bankruptcy changes requires attorneys to only use the IRS expenses?
2. Is it true that car payments must be included inside the plan if you're not repaying 100% of the debts?
3. Why do people with mortgages get to use their actual payments and not people that rent?
4. What questions should we ask her?

[AngelinaCatHub]

Your best bet for all your questions are, go to nolo.com and download the book on Chapter 13. It is quite good and has all the forms, tests, and figures you need. Also read all the "stickies" on the C13 thread before the posting part. It too will help you. 'Hub

[dp2008]

sorry

Will not post again.

[filingin08]

Hey, I don't think Hub meant to offend. He was only trying to provide you with additional sources of information. Stay on the board... ask questions... you'll find a lot of helpful folks.

[catleg]

If you haven't filed yet, you should start asking questions. 3300 is a pretty high payment. Are you making 401k contributions or paying off 401k loans? Don't feel like we don't want to help you here, we do.

[dp2008]

Thanks

I've visited this site for the past year and I have read the stickies. I did not find the answers to my questions in the stickies.

My husband's 401k contributions are mandatory and included in the plan.

[filingin08]

I don't know how much help I'll be, but we were able to use actual expenses on lots of things, not just our mortgage. Even things we had never budgeted for before like house and car maintenance, vet bills. We filed when gas was $4/gallon, so we're seeing some savings now that it's down.

Our cars were included in the plan, but for us it was a blessing. The payments on our two cars were over $1000 and the interest rate was high (due to buying 6 months prior to BK and having crappy credit). Anyway, our total BK payment is $1275. The remainder of our car loans were spread out over the 60 month time period and the interest rate on one was lowered. We were paying $275 to one creditor alone.

Our atty doesn't always return calls or emails timely, and we didn't have sit downs with any others (we did talk to two others on the phone briefly). She far exceeded our expectations about helping us develop a budget we can live with for the next 4.5 years. BK is the only thing their firm does. I feel fortnate we found her given that we didn't really interview others.

[dp2008]

You sound like you have a great attorney. I just don't understand why our attorney has not asked us for a budget. Every time we ask questions she says she has to use the IRS standard deductions...that the laws changed in 2005 and the means numbers are "what they are." We file on May 1st and all she's shown us the B22C form. She won't show us anything else.

[StartingOver08]

Hopefully you have not paid your attorney in full yet.

I think you need to interview other attorneys. She does not sound that experienced if she says she has to use only the IRS standards

[liz417]

I agree with StartingOver, you really need to look around for another attorney. Your current attorney sounds like she doesn't have much experience (or isn't willing) to fight (if need be) for your best interests. You don't want to be in payment you can't handle and remember that you've got to deal with "this attorney" for the next five years...if she's this way now...
Keep looking...

[dp2008]

Thanks. My husband and I have decided to keep looking.

[liz417]

Thanks. My husband and I have decided to keep looking.

Good luck!

[justbroke]

1. Is it true that the 2005 federal bankruptcy changes requires attorneys to only use the IRS expenses?

If you are above median, this is generally the consensus view. While you can exceed the allowances in certain areas (home energy costs is one), you can't exceed others so readily (like food and clothing allowances, telecommunications allowances, car ownership allowance, car opeating expense, and rent allowance). Those items require a very good explanation, and generally the Trustees will fight you. I have never read a case where an over median income debtor was allowed an expense higher than the IRS expense for cars, or more than 5% on food and clothing (which is another IRS set standard).

2. Is it true that car payments must be included inside the plan if you're not repaying 100% of the debts?

This is District specific, but most Bankruptcy Districts require that all secured debt (cars, homes, etc) are paid through the Trustee (aka "inside" the plan). If you're not behind in payments (are current) when you file, you generally can Motion the Court to allow payments outside the Plan. This will generally yield per/hour attorney fees for you, as it's not a standard "no look" type of motion.

3. Why do people with mortgages get to use their actual payments and not people that rent?

Because the Bankruptcy laws, even after the major 2005 amendments, state that a persons homestead (personal residence) is necessary for effective reorganization. It's as simple as that. Some States, like Florida, go so far as to exempt a person's homestead (residence) 100% from creditors, even if it's worth millions of dollars! Renters have to go by the IRS standards (period). I have never read a case where someone exceeded it. I'm sure they'll allow it under exceptional circumstances, but that's another "fight" you'll have with the Trustee and that costs money.

4. What questions should we ask her?

Well, first, compare what was put on your Form B22C to what you actually spend. If you overspend in a particular category, ask if you can use the actual (higher) expense. As I already wrote, some areas are almost non-negotiable (like rent and non-rent expenses), and others are (like home energy costs).

Your lawyer will know what the Trustee likes and doesn't like and if they've been practicing bankruptcy law for some time, probably know the Trustee on a personal level. That means, they know exactly what the Trustee will like and not like, so don't, by any means, be mad at an attorney for telling you the Truth about what will pass the test.

What is not being really communicated here in this thread, is that "fighting" over some things in a Chapter 13, costs a lot of money. Fighting with the Trustee in a Complaint (Adversary Proceedings -- AP) or even as a contested matter, can get very very expensive. This is why attorneys don't just "fight" the Trustee over any and everything.

Remember, an over the median filer in a Chapter 13 does not have much leeway over expenses. The allowances are what they are. I only exceeded the allowances in one area, and that was home energy costs.

I would talk with your (current) attorney first, and see just what went into the numbers and where you could adjust things. If you're a renter, then it is what it is, and you will have to live by the housing allowance provided. This is exactly why I decided to change my mind on surrendering my home and renting. It just didn't make any sense to me that I could keep my above median home and pay less to unsecured creditors (and get to keep the equity), rather than rent and give more to unsecured creditors. Yes, it doesn't make sense, but it's the reality of the whole process.

Ask any other questions you like.