Newbie - trying to hold onto our car

[frodosdojo]

We filed Ch 13 in February and the lawyer just sent us paperwork to amend our plan within 24 hours. The confirmation hearing is next week.

Basically my husband is on disability and I am unemployed but had 2 surgeries last year so we got behind on our car payment. The car was repo-ed so we filed chapter 13 to get it back and try to set up a payment plan we can afford within the bankruptcy.

Our new crisis is husband has a child that he is in arrears $18k on child support and just received the DNA results last month. He wanted to pay the child support outside of the bankruptcy because adding it in makes our monthly payment unaffordable. Plus it looks like the lawyer changed our plan from 5 years to 3 years and we don't know why. Maybe the child support agency refused to allow payment outside the bankruptcy. But it seems odd that payments are to go directly to the mother. This doesn't make sense because an agency collects for her and that's where we currently send payments.

I have read that some people have been able to shop for lawyers but we had to pay our filing fee in bits and I'm not sure we can afford that. I get the feeling the attorney is making a few errors. It baffles me that he switched us to a 3 year plan.

If it all falls apart and we can't afford even the bankruptcy, is it possible for us to make arrangements on the car to keep it or will they come take it immediately ?

Should I make some calls tomorrow to other bankruptcy lawyers to see if they can help us get a better plan ? What should I expect ? Will we owe the current lawyer their fees if we switch to another lawyer ?

I appreciate any help and advice yall can offer.

[justbroke]

You really need to sit down with the attorney for 30-60 minutes and have the attorney explain it to you. If you do not need to be in a 5 year plan, because you are under the median, there is absolutely positively NO reason to be in a 60 month plan!

There are many reasons to pay "ongoing" payments outside the bankruptcy plan. If you pay inside the plan, and through the Trustee, the Trustee gets a 10% commission! Trust me, that adds up to a lot of money over a 60 or even 36 month plan. (My Trustee was to get $700/month for 60 months. That's a LOT of money to write checks.)

It also reads as though you just cannot afford to or can't file a feasible plan. Please let your attorney explain everything to you. You have some complexities which makes your Chapter 13 different -- as they are all different.

[frodosdojo]

Thanks, Justbroke. We talked to the attorney this morning and although the paperwork he sent us reads like we have to pay X in 36 months, he said we have 60 months. Regardless, the X payment is completely unaffordable.

The new debt cannot be paid outside the bankruptcy he said because it was incurred during the bankruptcy. We definitely can't afford this new plan.

So again my questions are, will the car loan people be willing to negotiate a new payment arrangement with us at this point or do we have to give up the car ? It's our only transportation.

If we cancel the bankruptcy, will we still owe lawyer's fees ?

[justbroke]

So again my questions are, will the car loan people be willing to negotiate a new payment arrangement with us at this point or do we have to give up the car ? It's our only transportation.

There is no way I can tell you that your auto lender would negotiate any payment plan.

If we cancel the bankruptcy, will we still owe lawyer's fees ?

Yes. The attorney earned the fees because the majority of the fees come from the actual filing and the creation of the Plan. If there are unearned fees that are "included" in the Plan, then the attorney should adjust the balance and you should only pay for earned fees.

If you can't afford the Chapter 13 payment, why can't you "convert" to Chapter 7 and be done? Additionally, you "might" be able to use something known as "redemption" to purchase the car for its current value from the lender. This would require getting a redemption loan. Most people have success obtaining a loan from 722 Redemption Funding (a division of USBank). There are some times when you can't get the redemption loan.

[frodosdojo]

There is no way I can tell you that your auto lender would negotiate any payment plan.

Yes. The attorney earned the fees because the majority of the fees come from the actual filing and the creation of the Plan. If there are unearned fees that are "included" in the Plan, then the attorney should adjust the balance and you should only pay for earned fees.

If you can't afford the Chapter 13 payment, why can't you "convert" to Chapter 7 and be done? Additionally, you "might" be able to use something known as "redemption" to purchase the car for its current value from the lender. This would require getting a redemption loan. Most people have success obtaining a loan from 722 Redemption Funding (a division of USBank). There are some times when you can't get the redemption loan.

Thank you for that info on redemption. A different attorney in the office mentioned that yesterday and it sounds like the best option. He told us the car is only worth $1750. I went ahead and applied for the redemption loan. He didn't mention anything about redemption loans, though. This really gives me hope.

[justbroke]

Just so that you know, a redemption loan will only work in a Chapter 7 and if you file a motion to redeem. This would require converting your Chapter 13 to a Chapter 7. Please make sure you have rationalized or at least calculated the affects of not doing a Chapter 13. Certain debts are excluded from discharge in a Chapter 7.

Also, your attorney will likely charge a fee for the conversion to Chapter 7. There's a very small fee from the bankruptcy court which is less than $30 for the conversion. Your attorney, as do you, would need to attend another 341 Meeting, and if you do the redemption, would need to file a Motion to Redeem. These will add additional costs to your case. Please ask your attorney about the fees for the conversion and the redemption!

[frodosdojo]

I just wanted to update you since you were so helpful and you gave me more information than our lawyer did.

Our attorney wanted about $800 to convert. As we explained ad nauseum we simply can't afford all the fees.

Time was of the essence and we were in danger of the Chapter 13 being dismissed. We decided to convert to Chapter 7 pro se and try to redeem the car. We filed the motion to convert on 6/9. Next week is our creditor meeting.

We were turned down for the 722 loan so it looks like we will have to give back the car. We are resigned to this fact and when we can afford another car, we'll pay cash for it.

Thank you so much for pointing us in the right direction. It isn't over but at least we don't feel overwhelmed by a plan that was unaffordable.

[justbroke]

Hey frodosdojo... sorry to read about your issues. Did your attorney actually submit a Notice of Withdrawal? I'm wondering if s/he did and if s/he did not then I wonder what impact this could have on moving forward. (For example, I wonder if the Trustee is going to ask about your lawyer at the 341 Meeting.)

Best of luck to you.

[frodosdojo]

Thank you for the well wishes ! The attorney did file a notice of withdrawal and we had 10 days to object. Of course we did not. They keep calling my husband and telling him he needs to pay $600 for the second credit course. They sent a letter this week as well. The trustee pointed us to a free course at our first ch 13 meeting !