Chapter 13 - payments plans - adjustable ? - due to unforseen circumstances??

[Bkq]

It is my understanding that the trustee can adjust the payment plan due to unforseen circumstances. However, my question is this: If I have to pay our bk laywer additional fees - due to adverse legal actions by unsecured/secured creditors - HOW DOES THE TRUSTEE CALCULATE THIS - IN TERMS OF MY PRESENT PAYMENTS. ( i.e. We are paying back 100% @ $2,750 per month. If I had to pay my attorney a flat fee e.g. to handle some unforseen action that needs to be defended - then - what does the trustee do - as far as my monthly payment???) Under the current circumstances - I would not be able to make that much of a payment - because I would have to come up with the money to pay our attorney. Thanks !!!

[CoBelle]

I don't have an answer but I'd sure like to know...so I'm bumping this in hopes someone will respond!

[despritfreya]

CB,

This goes back to my post regarding payment of legal fees through the Plan. If I recall correctly the attny wanted payment up front. I questioned this as, unless you were taking $$ from some exempt asset (such as IRA/401K) or it was being paid by a 3rd party I doubted you would be able to pay outside the Plan since your earnings are property of the estate. In addition, the Court has to approve the legal fees so the attorney must file an Interim Application for Approval of Administrative Legal Fees and Costs.

Normally (at least the way my firm handles it) but for a small retainer, all fees are paid through the Plan. The original funding in the Plan is only a proposal at the time the Plan is filed. The Order Confirming, which typically cannot be done until all litigation is over, will provide for payment of all "approved" fees and Plan payments will be adjusted accordingly.

Example

1. Original Plan $2,750.00/mo for 60 months
2. Original Plan only has $2,000.00 for legal fees.
3. When all is said and done, legal fees are $30,000.00
4. There is now a $28,000.00 (plus trustee fees) shortfall in Plan funding.
5. We are now 18 months into the case meaning there are 42 months left.
6. Order Confirming leaves payments at $2,750.00 through month 24 (now there are 36 payments left)
7. The Order Confirming increases Plan payments by approximately $855.00/month for months 25 through 60. Now the Plan is fully funded.

Again, this is how we handle the fees. Your attorney may have a completely different approach.

The only other approach I can think of if the fee is a "flat fee" and must be paid up front is to file a Motion to Waiver 3 or 4 Plan payments so that you can divert those monies to pay the attny. The waived payments must be made up therefore when you resume Plan payments the payment amount will be slightly higher. I suppose this could work but not likely in my jurisdiction.

Des.

[HHM]

It is my understanding that the trustee can adjust the payment plan due to unforseen circumstances. However, my question is this: If I have to pay our bk laywer additional fees - due to adverse legal actions by unsecured/secured creditors - HOW DOES THE TRUSTEE CALCULATE THIS - IN TERMS OF MY PRESENT PAYMENTS. ( i.e. We are paying back 100% @ $2,750 per month. If I had to pay my attorney a flat fee e.g. to handle some unforseen action that needs to be defended - then - what does the trustee do - as far as my monthly payment???) Under the current circumstances - I would not be able to make that much of a payment - because I would have to come up with the money to pay our attorney. Thanks !!!

Since there is money in the plan to pay your attorney, the money would simply come from the pool of unsecured creditors. Unless unsecured creditors MUST be paid 100% (which is rare), additional attorney fees simply reduce the amount (percent) paid to unsecured creditors.

[momofthree]

Does $2750 equal your dmi? If so, they will not increase your payment due to additional attorney fees, it will simply be re-routed from unsecured creditors to your attorney, and you will no longer be in a 100% payback plan. However, if your payment is $2750 because that's all it takes to pay off your debt at 100% and you actually have a higher dmi, then they may increase your trustee payment up to your dmi or back to 100%, whichever is lower.

This is assuming that you aren't required to pay 100%. If you are required to pay 100%, then your payment will have to increase even if your dmi isn't there. You'll just have to cut back elsewhere to make the plan work...

[Bkq]

Thanks for the response. We paid our attorney up front - for Chapter 13 - (for pre-bankruptcy evaluation/review) - as well as - fees to prepare the filing of chapter 13 bankruptcy. When the case was filed - last week - it was filed - so that we would be paying back 100% ($2,750/month) - and the additional income that we had left over - would be for living expenses (i.e. food, gasoline, maint on our car, medications etc. - which is approximately $960/month - for us to live on). Any thoughts - given this information??

[HHM]

Thanks for the response. We paid our attorney up front - for Chapter 13 - (for pre-bankruptcy evaluation/review) - as well as - fees to prepare the filing of chapter 13 bankruptcy. When the case was filed - last week - it was filed - so that we would be paying back 100% ($2,750/month) - and the additional income that we had left over - would be for living expenses (i.e. food, gasoline, maint on our car, medications etc. - which is approximately $960/month - for us to live on). Any thoughts - given this information??

That doesn't make sense, your plan only includes $960 for living expenses.

Let's back up.
HOW MUCH DO YOU MAKE PER MONTH, GROSS

[momofthree]

Is there a reason that you're somehow required to pay back 100%? Are you keeping non-exempt assets?

How big is your household? You say "our" lawyer and "we" so you must have at least 2 people in your household. $960/mo for all of your living expenses doesn't seem nearly enough for more than 1 person. Unless there is a reason you have to pay back 100%, it sounds like you're getting screwed here.

I ditto HHM, what is your gross income & family size???