Lawyer Response

[TeeA86]

I have met with two attorneys... This is the one I was planning on going with but I feel like he wants a quick, easy case.. He is cheaper. Am I wanting too much in my bankruptcy case? I've read a little bit on it... I've seen where people have kept their furniture even when discharging. I don't want my father hurt in my bankruptcy case.. I would reaffirm this debt to protect him but I still don't know if it will effect his credit. Would I still have to pay back my recent loan... it was for home repairs... not luxury items. How hard would it be to get Chrysler Capital to allow me to reaffirm at a lower cost?


"When we met, we discussed waiting until receiving my tax refund. I
> received my approval today and I am expecting my refund by 02/24/2017.
>
> I have a few questions/comments....
>
> 1. *Should I open a new bank account?* I bank with Capital One and I
> also have a credit card with them that I will discharge.

YES
>
> 2. I cashed a mailed check loan (that I did not apply for) on
> 01/05/2017. It was close to $3600. I've read that I need to wait 70
> days before filing Chapter 7. 70 days after loan will fall around
> March 17th. *Do you agree with waiting until then?*
>
I THINK YOU WILL HAVE TO PAY THIS MONEY BACK, REGARDLESS HOW LONG YOU WAIT.
I BELIEVE THEY WILL FILE AN OBJECTION TO THE DISCHARGE OF THE DEBT.
> 3. I am still paying all of my bills on time... minimum payments mostly.
>
> 4. I have a mattress set and sofa set (two separate accounts but both
> with Wells Fargo). I want to discharge both but keep both since they
> are technically exempt items. *Will this be possible?* I have paid on
> the mattress set for a year and I have paid on the sofa set for at
> least five months.

NOT EXEMPT AS IT APPLIES TO WELLS FARGO.
>
> 5. I will get the addresses of all debt asap. *Do I also need to
> submit the addresses of the debt I am keeping*
YES, LIST EVERYONE YOU OWE MONEY TO.
> - my mortgage, my car note, student loans and a credit card in which
> my father is a cosigner.

> I plan on talking to my dad to see if he would rather transfer the
> card balance to one of his personal credit cards instead of it being
> involved in a bankruptcy even though I will reaffirm that debt.* Is
> that a good idea?
> *
*PROBABLY NOT*"

Second email... Same day...

"I just thought of another question.... I don't know if it is possible though. I owe WAY more on my Explorer than it's Kelly Blue Book value. Is there a way to possibly reaffirm the car loan but at a lower balance? Payoff is $11,453.52 KBB at Very Good Condidtion is $6,347. What do you think about this?"

Lawyer's Answer
"THAT would be a chapter 13

what is the purchase date of the vehicle. need 910 days

reaff for lower balance only by consent of lender, not gonna happen"

[bcohen]

I think this attorney is giving you lousy advice, and you should keep looking for someone else.

First of all, receiving an spending one's tax refund BEFORE declaring bankruptcy is very basic common-sense pre-planning. I am incredulous that an attorney failed to advise you to do so, since you aren't being forced to file under duress.

Second, the loan which you accepted on 01/05/2017 isn't definitely non-dischargeable. It is true that loans or credit card usage within 90 days from the filing date are presumed to be fraudulent and non-dischargeable, but the creditor must file an objection. It is also true that if you simply wait until 91 days have elapsed, you avoid this presumption. Likewise, if you make one or two payments on the loan, and you wait until 91 days have elapsed, the likelihood of a creditor objection becomes almost nil, because they would have to prove fraudulent intent, which your payments would tend to disprove.

Third, once you have decided that bankruptcy is definitely in your future, STOP paying unsecured creditors! Any money spend paying toward these debts is wasted, because the debts will be discharged in your bankruptcy.

Fourth, although loans for furniture might claim to be "secured", the fact of the matter is that repossessing used furniture is extremely unprofitable, and most lenders won't bother trying. There are certain in-store finance companies who do repossess furniture (and destroy the repossessed furniture) simply to spite the debtor; Nebraska Furniture Mart is an example. The bottom line is that you can discharge your debt to Wells Fargo and keep the furniture. If they press the issue, you can offer to redeem the items for their current value, which would be a LOT less than what you owe on the loans, or you can simply ignore them and they will go away.

Fifth, you can certainly attempt to negotiate with your current auto lender, though you might not get anywhere with them. I certainly would not reaffirm $5000+ in negative equity. You can either attempt to redeem the vehicle, by taking out a redemption loan for its current value, or you can quit paying, drive it payment-free for a few months until it is picked up, and then buy something else.

[justbroke]

I have met with two attorneys... This is the one I was planning on going with but I feel like he wants a quick, easy case.. He is cheaper. Am I wanting too much in my bankruptcy case? I've read a little bit on it... I've seen where people have kept their furniture even when discharging. I don't want my father hurt in my bankruptcy case.. I would reaffirm this debt to protect him but I still don't know if it will effect his credit. Would I still have to pay back my recent loan... it was for home repairs... not luxury items. How hard would it be to get Chrysler Capital to allow me to reaffirm at a lower cost?

You hire an attorney because they are the best to represent you in your specific District with your specific circumstances.

Everything that this attorney wrote is spot on. You are wanting too much. You literally can't have your cake and eat it too in a bankruptcy.

1. As for furniture, people keep furniture that they paid for and for which they have an exemption. it appears that you purchased with a store card and that store has an automatic "lien" against the property known as a "purchase money security interest" (PMSI). All liens pass through a Chapter 7 bankruptcy unaffected (period). Whether or not Wells will want your old dirty mattress is a case-specific matter.
2. Depending on who is the primary borrower on the join credit accounts, it may not affect your father, but the creditor will look to him to pay that debt. You would discharge it as far as your own personal liability is concerned. The co-borrower will always be on the hook for the debt after that point. (Student loans are never dischargeble without a trial so they'll pass through, usually, unaffected.) You may want to reaffirm that debt if your sole intention is to protect your father. You REALLY should be speaking directly, in a sit-down face to face, with your attorney.

Now whether you can "redeem" your vehicle is another fact-specific issue. In a Chapter 7 you can redeem it for its value by filing a Motion to Redeem and having the ability to redeem for current market value. Which value to use also differs by District and is why you hire an attorney. Redemption (11 USC 722) is different than reaffirmation.

Your true issue is that you have a lot of join debt with your father. I don't know what you're trying to achieve with a bankruptcy if all your debt is commingled.

The bottom line is that you can discharge your debt to Wells Fargo and keep the furniture.

I agree with most of what bcohen wrote. You really need to shop around for an attorney that is more progressive when it comes to how to get through a Chapter 7. Not creative, but not passive.

The one thing that I can't agree on is "[t]he bottom line is that you can discharge your debt to Wells Fargo and keep the furniture". The bottom line is that you "may" get to keep the furniture if the lender is non-aggressive. There are collection agencies hired by various "PMSI" lenders that like to collect this junk... even if it's just in spite.

What you need to deal with is the reality that a.) the loan you took, the lender "may" file a complaint to have it non-dischargeable, b.) Wells Fargo "may" claim their lien in the furnishings that you purchased, c.) your father "may" be impacted by your bankruptcy because your debt is so commingled, and d.) you're like to not get far with negotiating on a reaffirmation and you must decide your best course of action (give up the car and get a new one, redeem, or (puke) reaffirm).

I would shop several more attorneys in your area. Please realize, however, that I listed 4 things that "may" happen or may not happen. You can hope for the best and that those things don't happen, but you must plan for the worse.

Everyone wants a Chapter 7 "liquidation" to work entirely in their favor, where they keep the boat, cars, furnishings, clothes, $$$$ in the bank, and the house. It just doesn't work that way for everyone and there are so many factors that go into exactly who, under which jurisdiction, and under what circumstances, gets to keep all their... stuff.

[leonel9]

Throwing in my two cents to this conversation:

- I'd double-check the 910 day rule. I believe this only applies to Chapter 13 cases, in which you must have had the auto loan for 910 days before you can "cram" down the amount to equal the value. For Chapter 7 cases, you may (or may not) have success in negotiating a lower rate/principal amount with your lender. It seems to be that a surrender or retain and pay is in your better interest, if the lender does not agree to change the terms in a reaffirmation. You may want to list your intent as something other than reaffirm, -- not only because it's a bad idea to reaffirm an auto loan that has $5,100 of negative equity at a higher rate, but also because it may help you negotiate a reaffirmation at better terms. The lender will then have the option of negotiating or eating the negative equity + repossession costs. If you list a surrender as your intention, be prepared to surrender. And know that there is a limited amount of time to make changes after filing.

- If you really want to keep the car, and haven't already looked into the redemption option -- check it out. Reach out to places like www.722redemption.com and see what your options are. The interest rate will be terrible, but you may save money in the end -- and you can always try to refinance later (say, after 6 months). If you head in this direction, consider how much the potentially higher interest cost (and fees associated with redemption) compare against your alternatives. Loans aren't the only way to redeem vehicles, though. If you have a family member that has the cash (or can help get a loan at a better rate) that's another option. In my case, I'm taking a 401(k) loan to pay the current value of my car.

[TeeA86]

I think this attorney is giving you lousy advice, and you should keep looking for someone else.

First of all, receiving an spending one's tax refund BEFORE declaring bankruptcy is very basic common-sense pre-planning. I am incredulous that an attorney failed to advise you to do so, since you aren't being forced to file under duress.

Second, the loan which you accepted on 01/05/2017 isn't definitely non-dischargeable. It is true that loans or credit card usage within 90 days from the filing date are presumed to be fraudulent and non-dischargeable, but the creditor must file an objection. It is also true that if you simply wait until 91 days have elapsed, you avoid this presumption. Likewise, if you make one or two payments on the loan, and you wait until 91 days have elapsed, the likelihood of a creditor objection becomes almost nil, because they would have to prove fraudulent intent, which your payments would tend to disprove.

Third, once you have decided that bankruptcy is definitely in your future, STOP paying unsecured creditors! Any money spend paying toward these debts is wasted, because the debts will be discharged in your bankruptcy.

Fourth, although loans for furniture might claim to be "secured", the fact of the matter is that repossessing used furniture is extremely unprofitable, and most lenders won't bother trying. There are certain in-store finance companies who do repossess furniture (and destroy the repossessed furniture) simply to spite the debtor; Nebraska Furniture Mart is an example. The bottom line is that you can discharge your debt to Wells Fargo and keep the furniture. If they press the issue, you can offer to redeem the items for their current value, which would be a LOT less than what you owe on the loans, or you can simply ignore them and they will go away.

Fifth, you can certainly attempt to negotiate with your current auto lender, though you might not get anywhere with them. I certainly would not reaffirm $5000+ in negative equity. You can either attempt to redeem the vehicle, by taking out a redemption loan for its current value, or you can quit paying, drive it payment-free for a few months until it is picked up, and then buy something else.

Thank you bcohen for your advice!!!

That's the thing, through this forum and reading up on the New Orleans bankruptcy court website, I know there are things that can be done that I feel as if he doesn't want to put in the effort. The first attorney I met with hasn't emailed me back yet. I found an attorney about an hour away. Her reviews are great and she seems to be willing to go an extra mile... if you qualify she request court fees to be waived. That is something the first two attorney's wouldn't even consider.

Again thank you for your advice!!! It is appreciated!!

[TeeA86]

You hire an attorney because they are the best to represent you in your specific District with your specific circumstances.

Everything that this attorney wrote is spot on. You are wanting too much. You literally can't have your cake and eat it too in a bankruptcy.

Your true issue is that you have a lot of join debt with your father. I don't know what you're trying to achieve with a bankruptcy if all your debt is commingled.

I agree with most of what bcohen wrote. You really need to shop around for an attorney that is more progressive when it comes to how to get through a Chapter 7. Not creative, but not passive.


I would shop several more attorneys in your area. Please realize, however, that I listed 4 things that "may" happen or may not happen. You can hope for the best and that those things don't happen, but you must plan for the worse.

Thank you justbroke for your advice!!!

I only have one thing that my father cosigned for me. A CareCredit card that has about a $2500 balance. Everything else is solely in my name. I will definitely meet with another attorney. I am willing to pay more for an attorney that I will feel comfortable with.

Again thank you!

[TeeA86]

Throwing in my two cents to this conversation:

- I'd double-check the 910 day rule. I believe this only applies to Chapter 13 cases, in which you must have had the auto loan for 910 days before you can "cram" down the amount to equal the value. For Chapter 7 cases, you may (or may not) have success in negotiating a lower rate/principal amount with your lender. It seems to be that a surrender or retain and pay is in your better interest, if the lender does not agree to change the terms in a reaffirmation. You may want to list your intent as something other than reaffirm, -- not only because it's a bad idea to reaffirm an auto loan that has $5,100 of negative equity at a higher rate, but also because it may help you negotiate a reaffirmation at better terms. The lender will then have the option of negotiating or eating the negative equity + repossession costs. If you list a surrender as your intention, be prepared to surrender. And know that there is a limited amount of time to make changes after filing.

- If you really want to keep the car, and haven't already looked into the redemption option -- check it out. Reach out to places like www.722redemption.com and see what your options are. The interest rate will be terrible, but you may save money in the end -- and you can always try to refinance later (say, after 6 months). If you head in this direction, consider how much the potentially higher interest cost (and fees associated with redemption) compare against your alternatives. Loans aren't the only way to redeem vehicles, though. If you have a family member that has the cash (or can help get a loan at a better rate) that's another option. In my case, I'm taking a 401(k) loan to pay the current value of my car.

Thank you leonel9 for your advice!!!

I started wondering if I should keep my explorer with the negative equity. I've paid on the car for 18 months. Hopefully, Chrysler Capital would agree to a lower cost.

Thank you so much for you advice! It is appreciated!