scare tactics of potential attorneys?

[PaKettle]

I was just told by this attorney on the phone, "Oh, $84k debt with only $49k income (this year $44) is an AWFUL lot, the Trustee might reject that... I need to go into the reason for all that debt with you..."

So right away, I hear "the trustee might reject that" and I get really nervous thinking "what if he DOES?" and the bottom line is I come away feeling nervous and lousy from that phone call!

I don't know if this is a scare tactic, trying to convince me that we need "the great attorney" to handle this for us and save us from "the big bad trustee", so to speak? Or if it's just the attorney being conservative (as he said he was) and honest? Hard to tell. All I know is I came away from the call feeling scared. But I have an appointment with the guy next week. I figure I may as well hear him out...

Has anyone else encountered this type of thing? This guy seems well qualified and was actually very nice on the phone, maybe he just honestly believes the Trustee in this district might have a problem with so much debt on so relatively little salary. Is that really that much debt?

I don't know, I just hate it when the attorneys tell you stuff that makes you feel like you might have a big problem! Maybe they're right?! I hope not!

The very first guy I spoke with, weeks ago, told me I might be considered as committing fraud because the last 2 numbers of my social are mixed up on all my accounts. But then every other attorney I spoke with says it shouldn't be a problem at all, since all the other info the credit bureaus have is accurate. (Now I have corrected that # with all the creditors and the credit bureaus - except for Experian who demands a letter from the social security office! Arrrgggghhh! That will no doubt take up half of one of my days off. Every single other bank and credit bureau corrected it either on the phone with security questions or via mail with a copy of my social and drivers license!)

[Boscoe]

Naw, that is BS. You will need to list out what makes up the $84k and when it was incurred. Sometimes they want to hear the "story" of how you got to where you are today.

But I have heard of cases way over $100k, so you should be ok. Ratio of debt to income is not a factor. Hell, with the properties I am surrendering, my debt is probably over $1M !

[emoney]

He was just doing his job. Under the new law the BK attorney you hire and pay for has some duty to the BK court which hires the Trustee. Your attorney is susposed to really check out your truthfullness and the accuracy of what you are giving to the court.
He needs to know the truth and then the can help you the most.
Would you not tell the truth to your doctor?
regards,
emoney

[Lindsay]

Our income is low and our debt is high. I were trying to expand an eBay business and used our personal credit cards. My husband makes a horrible salary and I took a gamble and it didn't work out. Ebay isn't the best place to sell anymore.

When we called our lawyer, he asked the reason for the large debt and he didn't really elaborate or try any scare tactics on us.

It may be some lawyers are more nervous than others. I've read about alot of people who have high debts/low income. Maybe you thought your income was going to increase. Or there are people that are completely unemployed for two years before filing bankruptcy on various internet boards. Alot of people end up in bankruptcy because they were living on their credit cards, but that doesn't mean that they didn't have hope that their situation would improve.

My big regret is not filing bankruptcy three years ago when our financial trouble started. I've been trying so hard to pay the minimums for all this time while the debts are climbing due to 30% interest rates. I've always wondered how much I've paid in interest over the past three years versus what I actually spent. In our situation, every cent of cash we had went to the minimum payments and we charged groceries, gas, utilities, ect. I kept hoping and praying that things would get better and reading frugal/debt reduction books, but the total owed (just over $80,000) kept growing and then I realized that there was no way out. I suspect the trustees have seen this situation alot.

[PaKettle]

He was just doing his job. Under the new law the BK attorney you hire and pay for has some duty to the BK court which hires the Trustee. Your attorney is susposed to really check out your truthfullness and the accuracy of what you are giving to the court.
He needs to know the truth and then the can help you the most.
Would you not tell the truth to your doctor?
regards,
emoney

I would always tell the truth to my doctor, and I would tell the truth to my attorney if I was sure he was on my side. But it seems to me that the attorney should be working for ME not for the Trustee, and delving into the whys of my situation shouldn't be as important as just "Do I qualify and are you going to get my debts discharged?"

In other words, what makes the difference what I used the money I borrowed for? From what I have gathered, here, it really should not matter as long as I borrowed in with the intention of paying it back, which I did. So any debt that I've been paying on for over a year or two really should not be in question. No? Why do they want to delve into that. The fact is, I'm not sure where all the money went, it just went. Some of it I gave to my wife's family to help them with medical bills, but I don't know if that's an "acceptable reason" so I don't know if I should say that.

I just think that an attorney should make you feel he is on your side, and try to make you feel like he's going to help you, not make you more nervous about whether or not you are going to qualify or whether or not your case is going to be rejected for god knows what reason. All I want is an attorney who is on my side, makes me feel secure that it's going to work out, and who will help me make sure it does work out; not someone who makes me feel like maybe it won't work out...

When I filed way back when before the means test, my attorney (in another location) just told me, "Don't worry about it! I'll get you out of this! We'll make it work!" and that's what he did. That's what I want to hear from my attorney, not "Well, gee, you might have a problem here... I'll see if I can help you, but you've gotten yourself in quite a mess..." I don't want to hear that unless that is really, truly the truth... not a scare tactic to get me to sign on with that attorney.

[ssdsco]

I have $200k in debt, will easily pass the means test in a few months, don't have a lot of non-exempt assets and don't have any issues that could potentially be considered fraud other than what the court may consider excessive gifts($2000) to my children last Christmas. At that time I was making $200k a year and all payments were current for the last 30 years.

One of the attorneys I interviewed told me the trustee will do everything he can to force me into a chapter 13 or other nasty, creative things because I also have $550k in a 401k and a $4k/month pension that is exempt. He told me the trustee will probably try to force me into a chapter 13 so he can monitor any 401k withdrawals for 5 years and then take that cash to pay my creditors. The attorney said he knows his way around bankruptcy law/courts and could probably save me a lot potential grief. From my other attorney interviews and what I'm reading in the forum this is all BS and just a "scare tactic". I do wonder how “creative” the trustees can get.

The other 2 attorneys I interviewed sized up the situation and recommended chapter 7 after I completed the six months needed to qualify for the means test. However one of these two attorneys made me feel like I should be thrown in debtor’s prison or at least get a job instead of caring for my wife who has serious medical problems. So out of my first three interviews I have one potential attorney who said as long as I make it through his two year financial strip search everything should go smoothly. I’m in the process of interviewing a 4th as well.

It is a pain in the a** but hopefully all the advice about doing the free consults with as many attorneys as you can and at the same time educating yourself about bankruptcy will prevent issues down the road.

This is a great forum and I really appreciate the support from the moderators and the other folks in the same boat as me.

[Cassiopeia]

My big regret is not filing bankruptcy three years ago when our financial trouble started.(

I just had to comment on this.....

I wonder how many of us feel this way? I know I sure do! I was starting to get into real financial difficult a few years ago too. I opted to take a home equity loan to "consolidate debts." Well, you know the rest of the story.... I just got in deeper and deeper. Now I thank the Lord every day I FINALLY filed BK, but I so wish I had done it sooner and instead of the home loan. Now I still will have to pay that off, of course, I'm keeping my home. But it sure would be nice to have ALL debts discharged and my home free and clear.

[CindyLou]

Beware of scare tactics!! Go with your gut! When I was looking to file it was before the new law and I was a high income and high debt filer about to file chapter 7. One attorney told me that even with the old law that I was sure to get thrown right out of the court room at my 341 and that in order to take my case he woud charge a min. of $6000! He told me all kind of horrible stuff! Almost had me convinced. I ended up paying a paralegal $299 to fill out my paperwork and it went off without a hitch!! Go figure! I've often wanted to mail him a copy of my discharge paper!

[SinkingFast]

We heard similar things too, PaK.

Attnys didn't wanna fool with outa State Exemptions. Weren't sure how outa State Exemptions would fly in Court here.

We had way too much debt in relation to our income and no assets.

You name it.

Cindy's right. Go with your gut.

If your gut says this attny is a "NO GO!" then move on.

[B12]

I should have filed longggggggggg before I ate up my 100,000 in equity. Especially making this pill harder to swallow is that in my state, the entire homestead is protected!

The BIG bank whom I will not identify, gave me the power to use up my equity and now they are getting stuck with it.

I think, like others, I never even would consider BK as long as I had the money somewhere to pay the bills. Maybe it was a moral thing, maybe the upbringing, maybe, maybe, maybe. Who knows?

Then the money ran out one day and I had to take a long, hard look at BK. I dreaded telling the 3 kids, but when I did, they said, SOUNDS LIKE A GOOD BUSINESS DECISION. I was in shock at their reality of the situation. I had put them through big universities by myself, had always been successful and had taught them to be financially responsible. Yes, they are financially responsible and no, their tuition did not contribute to my BK.

A small business, which I funded with personal credit, and living off credit cards with no income for awhile put me under.

Did I realize I had this choice a couple of years ago? Probably not. So, the only way to move is...... forward.

[Lindsay]

Cassie, thats what happened with us too. We started having trouble with poor business and low income about 3 years ago, took out $30,000 against our home equity to pay off half the debts, and that turned out badly of course. My biggest character flaw is that I'm too hopeful. I always thought things will get better, hubby will make it right and get a good job, eBay will pick up if I double my listings and work harder. I had always hoped that I'd be able to pay the debts off and be debt free. But the truth of the matter was that I didn't even realize how much we owed or how much our actual living expenses were. I'd take the cash, pay the monthly credit card bills, and when there was no cash left for groceries, ect, I'd charge them. It didn't help that after we refinanced, my husband purchased a vehicle that we couldn't afford. This didn't cause the bankruptcy, but it played a part, along with other factors. Right after we bought the gas-guzzling truck, gas prices skyrocketed, food prices went up, my daughter needed braces, and my oldest son went to college. The dog developed a horrible eye infection, and various appliances started breaking down. In one years time, the dishwasher, washer, and stove went. It just kept getting worse and worse like a voodoo curse had been applied to us. But I still kept thinking that it would get better if I could hang on a little longer.

Then one day, I realized that we were in so deep that even if my husband got a better job and eBay perked right up, it would be nearly impossible to pay off this monster debt at 30% interest. I realized that short of winning the lottery, there was really no hope left. Then I started to think about bankruptcy. I realize that we are in a place in our life where Chapter 7 was the only option. We don't have any equity in our home left, our only asset is our truck which we owe about $14,000 and its worth $17,000, and our income is very low. We really need a fresh start and we've probably needed one for years, but I was too hopeful (and too prideful).

That's why I don't understand why the lawyer would try to scare PaKettle about low income/high debt. I think most people have a similar story with their bankruptcy. Don't most people have to file BK because they don't make enough money to pay the bills that they accumulated? If you have a large income, you have to file a Chapter 13. So doesn't that mean that everyone who qualifies for a Chapter 7 is relatively low income for their state? What that lawyer said just doesn't make any sense to me.

We were overspending our income and at 30% interest rates, we got caught in the credit trap big time and it just kept snowballing until the debt became mammoth and BK became our only option. I know some people who filed BK because they were $100,000 in debt from gambling and they had low incomes and no assets. There is a set of brothers on my street who had to file because they gambled away a fortune in the casinos. They both filed Chapter 7 within a few months of each other.

I think its terrible that lawyers will scare people. I was lucky with the first lawyer we talked to. He said we were the perfect chapter 7 candidates. He did ask how we came to owe so much but just in casual conversation. He didn't act stunned or anything and he was real reassuring about the situation. We haven't retained him yet and I was planning on seeing a few other lawyers to pick the best one, but after reading about some of these lawyers, I'm scared to talk to another one!

B12, I told my teenage children right away when I realized we were bankrupt. None of them seemed troubled or upset about it at all. I guess they know we can't go on with such stress and we do live pretty poorly. No vacations in the last 7 years, we have a small house and very modest furnishings. I think it would probably upset kids more if they had real fancy stuff or were going to lose a beautiful home or private school, ect. I told the kids that we'd have to tighten our belts for a while. My 16 year old daughter sensed she would be getting less clothing and immediately got an after school job at the local fast food restaurant. My youngest son loves takeout and he's been cheerfully eating more frugal meals like spaghetti and soup for dinner that he would have refused before. The compromise was that we'd get takeout once every 2 weeks and it couldn't cost more than $20. That was a little bit of a relief because I was afraid that they'd think badly of the situation.

[B12]

Teenagers!!! God bless you. LOL I remember it well.

Actually I dreaded telling my kids, in their late 20s, because I was embarrassed. They are all very successful in business (no lawyers, thank goodness) and always looked up to me as their mentor. I felt as if I had disappointed them. When they responded with, GOOD BUSINESS DECISION, I felt so relieved.
They even offered to pay off the debt, but I would never let them do that. My mistake, my responsibility.

[chpxiii]

Lindsay, it's amazing how a family pulls together once people in that family are honest with each other.

And as far as kids "now a days" saying it's a good business decision, they are, decidedly, growing up in a different world. Companys go bankrupt and lay people off all the time under the guise of "good business decisions." In the mean time, *people* get hurt. So I think kids and teens have that in their psyche.

That's just my armchair psychologist/sociologist/ethnographer talking.

[CATCHMEIFYOUCAN]

Family

Lindsay, it's amazing how a family pulls together once people in that family are honest with each other.

I have to agree on that coming from a family of 5 brothers and 5 sisters, and I'm number 11 (adopted at that, while the others are blood), nonetheless I have never felt any different from them, even picked up some of my dad's habits (gambling). My brother and sister were the ones that pursuaded me to file instead of go with a debt managment company. My $65,000 was pennies on the dollar as my brother quoted and said that is nothing compared to the huge businesses out their that can and have filed in the millions. The creditors ain't gonna miss the money and are surely not making a loss. He even suggested the lawyer I had done a search on early part of the year, little did he know that I was considering filing at the time.

I can tell you had a very "honest," lawyer from the get go, he said all you have to do is quit one job and you can file for Ch7 and be done! No need for a 13 unless you want to! So the story goes ...

Best Wishes everyone ! Catchmeifyoucan

[cathywhite4495]

I think some lawyers do like to be dramatic and make you feel like you need them for everything. When I went to my 341, I was watching all the lawyers and how they were talking to their clients. THe ones that went in and out the fastest were the ones that also seemed to be the most respectful to their clients - they talked to them in normal tones and seemed quietly confident. The blustering ones that were talking to their clients like they were children (aka George dubya talk) seemed to be in with the trustee the longest. I even heard one atty that gave his client the wrong answer to a question she asked! That's why I think it's important for people to be as informed as possible about the process even if they have an atty.
BTW, my family and friends have been truly amazing! I think my kids are relieved that I've filed. We've been living under so much stress for so long and now it's starting to go away. We made a similar deal with the eating out. No more fast food but we get to eat out twice a month. We've been doing it for a month now and I've realized how much more we enjoy eating together when we do go out. I have a couple close friends and their families that join us and we have so much fun!
This whole process really lays open what matters - people!