Vastly Different Opinions

[jwmc1]

I have seen 3 attorneys regarding my proposed 13 and will see my 4th on Friday. I am getting vastly different opinions on my proposed budget. One of my attorneys stated that my budget showing 60% repayment would work fine, but another stated I would likely be at 100%. Have any of you run into this?

[justbroke]

If they are just "quickly" running the numbers, that's just their initial estimate. There are a combination of things, as you're learning, that affect your disposable monthly income (DMI). If you are over the median, it's pretty much fixed on how much expense you have (because most of it comes from the IRS allowances). If you are under-the-median, the variation is greater because expenses are ad hoc.

I'm sure you have already run the Means Test yourself (at LegalConsumer.com), so how did you calculate it to be?

I'm unsure if anyone should shop (Chapter 13) attorneys based on their "speculative" guess at your DMI from a phone interview. You are best to ask the attorneys, is that the real number? Is that based on your experience? Is it normal to pay 100% in a case such as mine? Is it possible that the amount is actually lower? What drives my percent payback that high? Are there additional expenses that you haven't asked me about that could lower my DMI?

Always remember, it's not really the percent payback that you should even be looking at. It's how much of your income is left over and becomes categorized as DMI.

[klandsb]

As Justbroke states speculative assumption of payback by attorneys is baloney. Believe me when I say at a free consultation they are just running the numbers very quickly and really have no great crystal ball of your actual payback in true numbers. I went to 3 attorneys also and got 3 different figures. I found in my case I wish I have gone to 3 more (6 total) due to my naieve understanding of the long haul in a bk. You need to find someone who is very experienced and someone who is interested in working out a feasible plan working with your numbers. Also, I believe you have to have a feeling like , I really think this attorney will be the one who I want to work with for the next 5 yrs. What I am trying to say is you dont want someone who is overloaded and doesnt return phone calls or someone who once they get your money isnt looking out for your best interest. Is this any easy task... NO... I am not sure you can ever be 100% sure but I know there out there and I dropped the ball and got in a hurry and well now it is what it is...

[HHM]

Any attorney that would even give you an estimate at a free consultation is not an attorney I would probably hire. You want an attorney that would be honest and tell you...

"Your budget is going to be what it is going to be, it is determined by your income vs expenses, and the totality of your circumstances. What is important, right now, is the strategy that is going to get you out of debt, not the specific tactics. Rest assured, you will have a livable budget if chapter 13 is the right option for you, but until you hire my services and I conduct a complete case analysis, I am not comfortable setting an improper expectation."

[justbroke]

Very nice HHM.

[jwmc1]

Any attorney that would even give you an estimate at a free consultation is not an attorney I would probably hire. You want an attorney that would be honest and tell you...

"Your budget is going to be what it is going to be, it is determined by your income vs expenses, and the totality of your circumstances. What is important, right now, is the strategy that is going to get you out of debt, not the specific tactics. Rest assured, you will have a livable budget if chapter 13 is the right option for you, but until you hire my services and I conduct a complete case analysis, I am not comfortable setting an improper expectation."

Good info, but I guess my real question has more to do with what the expenses are that would be allowed. One attorney said the food budget seemed right, the other felt it was too high. I had another tell me that my health care reimbursement account (pre-tax) was ok, and another questioned it. Obviously the expenses are what they are, but I would think that with anything there would be grey areas that certain attorneys might push that others might not.

[justbroke]

Good info, but I guess my real question has more to do with what the expenses are that would be allowed. One attorney said the food budget seemed right, the other felt it was too high. I had another tell me that my health care reimbursement account (pre-tax) was ok, and another questioned it. Obviously the expenses are what they are, but I would think that with anything there would be grey areas that certain attorneys might push that others might not.

This is exactly the issue. We have no data to even begin to help you.

As stated earlier, if you are over-the-median, many of your expenses are fixed by the IRS allowances. This includes food, housing, utilities, motor vehicle ownership and operating expenses, and other similar items.

We can't guess at it either. Yes, different attorneys feel more comfortable with certain expenses. Much of this is based on their experience and their rapport with the Trustee and the Judges.

Yes, healthcare reimbursement accounts can be interesting if you can't prove the underlying medical need. If you have high medical costs, then you could use it as a legitimate expense item, but it may require explanation.

You should still follow HHM's advice. This is more about finding an attorney willing to fight for you and who you are comfortable with... than wondering why the DMI payment is different.

[HHM]

Again, you are talking specific tactics, at a consultation that is more about goals and strategy.

The expenses are pretty much common sense. It is what you would expect. The basic criteria is what is reasonable and necessary. You're trying to get a chapter 13 plan without paying for a chapter 13 plan, that is an unrealistic expectation for an initial consultation.

Again, a good attorney would simply stay, we will get the best budget we can for you, and leave it at that. If you have specific questions about specific expenses (e.g. will I be able to make my boat payment in a chapter 13; that is easy, the answer is no) If you ask, what is a reasonable grocery expense, a good attorney would probably say; "the bankruptcy petition is a legal document and asks you to state what you actually spend, so, what do you actually spend?" "However, if you have been living frugally, we will recommend amounts given your "specific" circumstances."

[PacificBlue]

I can not stress this enough, (these guys are right) FIND THE RIGHT ATTORNEY! We contacted 9 total, (one is person, 8 by phone). It was when we were just going to give up, and take it on our own when the RIGHT attorney called us back last night. We go in and see him next week. He explained in detail the process, and how to get the most out of our plan. (though ours is a little more then average due to a serious medical condition).

[UpsideDownMI]

If your expenses are legit, you will have nothing to worry about. I believe you will have the same trustee that I have, and I can tell you that he is more than fair. Your health reimbursement account will not be an issue as long as you don't double dip and also claim medical expenses on schedule J. I have an HSA that I listed on schedule I, which pays all of my medical expenses. It was never questioned by the trustee. For food and other expenses, you will be fine as long as do not exceed the federal guidelines.

[ArizonaBK13]

After interviewing 3 attorneys, and understanding the full cost of engaging their services, (ranging from $1500 to $2000 out of pocket + filing fees), I worked out with the attorney I wanted to move forward with to pay them $500 to get the statements and schedules prepared along with face time with him to review the information to the point that it is a signature away from filing. A part of the agreement of the $500 initial work was that if I opted to continue to move forward with him (which I did) that $500 came off of the out of pocket fees that I owe him.

In doing this, I got more of his attention to get accurate numbers (I'm no longer a "free consultation"), was able to test the waters with him (and his staff), I have all the statements and schedules based on my information prepared, and continuing to have him represent me hasn't cost anything more than agreeing to the full amount up front, but I had some experience working with him before paying the full amount and helps confirm my choice.

[jwmc1]

If your expenses are legit, you will have nothing to worry about. I believe you will have the same trustee that I have, and I can tell you that he is more than fair. Your health reimbursement account will not be an issue as long as you don't double dip and also claim medical expenses on schedule J. I have an HSA that I listed on schedule I, which pays all of my medical expenses. It was never questioned by the trustee. For food and other expenses, you will be fine as long as do not exceed the federal guidelines.

Hey UpSide, I noticed you were on a 36 month repayment with only 4% going to unsecured. How did you manage that? I thought you could only do less than 60 months if you were paying back 100%.

[justbroke]

Hey UpSide, I noticed you were on a 36 month repayment with only 4% going to unsecured. How did you manage that? I thought you could only do less than 60 months if you were paying back 100%.

I thnk you misunderstand the Chapter 13 rules. It's 36 months if you are under-the-median, and 60 months if you are over-the-median. You can propose fewer months than 36 or 60 if you propose to pay 100% of the allowed unsecured claims. (11 USC 1325 on the "applicable commitment period")

[jwmc1]

OK, that's right...thanks Justbroke

[justbroke]

Anytime!