General rates to convert ch13 to ch 7 in Va

[Donna123]

Hello,

First thing, Thank you for sharing your experiences & advice pertaining to the bankruptcy forum. We are in a ch 13, 90% think we may convert to a Ch 7, due to
loss of income. Payments are current 600 mo , 2 yrs in a 5yr plan. mortage is current, not in the plan, we are paying irs, 2 vehicles 2004 & 2005 & credit card debt. However
I talked to a paralegal & was told it would cost 1000.00 to do convert to 7, attorney already paid
over 3000.00. Am I out of touch? Do you think this fee is high? The attorney has not had to do anything extra. Any input? Can I complete my own conversion if the right forms are filed?
Thanks
Donna

[kornellred]

That sounds like a pretty high fee for a conversion. You should look into the possibility of a hardship discharge of the Chapter 13.

[momofthree]

She's not going to get a hardship discharge unless she is facing a permanent disability to prevents her working again. Hardship discharges are rare.

The $1000 fee seems pretty fair to me...especially since the attny loses any balance that he is still owed thru the 13 when you convert. I know our attorney won't be fully paid off until we make our final payment!

[justbroke]

Actually, $1,000 to convert a Chapter 13 to a Chapter 7 is not a high fee. It is actually pretty good. A conversion still requires a new 341 Meeting, a new Form B22A (Means Test) -- depending on District, and the attorney to complete other schedules such as the Statement of Intentions. The fee of $1,000 represents about 4 hours at a bankruptcy attorney's normal hourly rate.

Since you were not a Chapter 7 to begin with, I would not try to do this on my own. Generally speaking, a Chapter 13 debtor would need to go into a forbearance period prior to converting to a Chapter 7. You are paying the attorney to worry about whether you qualify for a Chapter 7 and then fighting to get your discharge. Because you have assets, you need to be especially careful with this. I do not recommend pro se in this particular case.

A Chapter 13 hardship discharge is very difficult to get. I recommend just going through a conversion rather than fighting for a hardship discharge. It would probably cost more than the $1,000 conversion costs to litigate the Chapter 13 hardship discharge.

Just my thoughts.

[jetsfan2010]

well the cost of filing any case depends on a number of factors, and since I also live in VA and am in the same situation as you(filed 13 first, now going to file 7) I can tell you that you may want to get a 2nd opinion.

[justbroke]

well the cost of filing any case depends on a number of factors, and since I also live in VA and am in the same situation as you(filed 13 first, now going to file 7) I can tell you that you may want to get a 2nd opinion.

If you go to a new attorney, it will usually be more than having an existing attorney convert the case. There are costs involved in converting a case. Especially a Chapter 13 case that has been in progress for 24 months.

I generally agree that shopping for the best rate is the normal course of events, but since this is an existing Chapter 13 that is post-341 meeting and post-confirmation, the attorney does actually have work to do.

Just some advice from the perspective of a Chapter 13 debtor who has gone through conversion. In the Chapter 7, the attorney will need to deal with;

• 2004 model year car which needs reaffirmation, surrender or redemption (or ride through);
• 2005 model year car which needs reaffirmation, surrender or redemption (or ride through);
• dealing with potential arrears on 2 cars caused by Chapter 13 "refinance" of loans;
• a new 341 Meeting of the Creditors;
• updated Schedules for any new debts (a conversion specialty);
• a new Statement of Intentions (for the cars and the home);
• dealing with any equity that was being addressed by the Chapter 13 (so-called "Chapter 7 liquidation test" or "value")

Those are just the "must" do items for this particular case. There may be other items such as adversary proceedings on dischargeability, dealing with an asset case, and any other matters related to a business (if the debtor owns one).

[Donna123]

Thank you for all your input, we will pay the attorney to handle the conversion for us. Note for just broke, the breakdown of what the attorney has to do sort of puts things in perspective.
Donna123