Attorney pushing for a Chapter 13 instead of 7 !! Need advise!!

[kcfaninin]

Back in April we retained a lawyer with plans to file a Chapter 7. At that time we were in a Chapter 13, but could no longer make the plan payments due to the fluctuation of our income. First attorney would not modify the plan so, we fired her. New attorney advised us to dismiss the Chpater 13, quit 3 of our part-time jobs (working 5 jobs between the 2 of us) in order to decrease our income and that we would be ready to file a Chapter 7 in October. Met with him last week and now he states we don't qualify for a 13 because we are still $28,000 above the median income. I filled out a sample Schedule I and J and it shows we have a negative $483 a month in disposable income. Our net monthly income is $7177 and our monthly living expenses being $7660 These are true expenses with nothing padded. Our house payment is $2325 with no equity. That amount includes taxes, insurance and PMI. Unsecured debt is $62,000. How could we NOT qualify for a Chapter 7. When I take the means test on line it shows NO ABUSE. Frustrated because I am using the same figures he is using. Should we get a second opinion even though we have already retained him? Can't really afford to pay another attorney. What would you advise us to do?

[aces67]

Back in April we retained a lawyer with plans to file a Chapter 7. At that time we were in a Chapter 13, but could no longer make the plan payments due to the fluctuation of our income. First attorney would not modify the plan so, we fired her. New attorney advised us to dismiss the Chpater 13, quit 3 of our part-time jobs (working 5 jobs between the 2 of us) in order to decrease our income and that we would be ready to file a Chapter 7 in October. Met with him last week and now he states we don't qualify for a 13 because we are still $28,000 above the median income. I filled out a sample Schedule I and J and it shows we have a negative $483 a month in disposable income. Our net monthly income is $7177 and our monthly living expenses being $7660 These are true expenses with nothing padded. Our house payment is $2325 with no equity. That amount includes taxes, insurance and PMI. Unsecured debt is $62,000. How could we NOT qualify for a Chapter 7. When I take the means test on line it shows NO ABUSE. Frustrated because I am using the same figures he is using. Should we get a second opinion even though we have already retained him? Can't really afford to pay another attorney. What would you advise us to do?

How much have you paid him? Have you asked him exactly WHY he thinks you should do a 13?

[kcfaninin]

We have paid him $500 so far. At our meeting he kept talking about a Chapter 13 but, said he needs to "plug in the figures" His paralegal is supposedly working on that as of Tuesday. I was upset becasue he is the one that had us dismiss our 13 and quit our second jobs. We are now worse off because we are making less money and are having trouble just paying our living expenses. Our plan was to eventually pick up more hours after we were discharged to have a little exta income coming in.

[aces67]

We have paid him $500 so far. At our meeting he kept talking about a Chapter 13 but, said he needs to "plug in the figures" His paralegal is supposedly working on that as of Tuesday. I was upset becasue he is the one that had us dismiss our 13 and quit our second jobs. We are now worse off because we are making less money and are having trouble just paying our living expenses. Our plan was to eventually pick up more hours after we were discharged to have a little exta income coming in.

I know $500 is a lot of money believe me we've been there but at this point if I were you I'd get another opinion.

I know when we converted from a 13 to a 7 it took several months. Our lawyer tried to do it in February but ended up saying we'd be better of to wait until April.

[kcfaninin]

Should we go into the consultation letting him know we are there for a 2nd opinion?

[aces67]

Should we go into the consultation letting him know we are there for a 2nd opinion?

Yes I would. I hope you find a lawyer that is willing to do a 7 for you. If your really negative on your income I can't figure out why your lawyer would be pushing for a 13 unless he doesn't realize that you are negative. When is he supposed to get back to you?

[kcfaninin]

What he did at our appt was take our gross income for the last 9 months and divide it by 9 to give us our gross montlly income. Well, to be technical about it, you need to take the last 6 months of income. The first 3 months of the year is when we were working our extra jobs and making an extra $1500 a month. He was saying our GROSS monthy income was $10,000 when in actuality it's $8000. It wasn't until we got home that I did my own figuring with our last 6 months of income and faxed his office a copy of the Schedule I and J that I completed. I spoke with the paralegal and told her how he came up with the $10,000 and that that was incorrect. As far as getting back with us, who knows!! This office has NEVER replied to any of our emails and never returns our calls when we have questions. I made an appointment for a 2nd opinion on Oct 28. So, if our current attorney doesn't get back to us by then, we are going to keep that appointment. By our figures, do you see any reason why we shouldn't qualify for a Chapter 7?

[aces67]

You're right. When our attorney converted us from a 13 to a 7 he took the previous 6 months income. Like you if he had used 9 months divided by 9 it would never have worked. I think you really should qualify for a 7 and I'm not sure why you're lawyer even used 9 months instead of 6.

You may get different opinions on this but IMO if your lawyer is not fully prepared to back you on a Ch 7 you may be better off with another lawyer.

[kcfaninin]

I agree because we don't have any disposable income to fund a 13. Unless we pick up part time jobs again, but he was the one that said "nobody should have to work like you guys are working" and told us to quit the extra jobs. I guess we will just keep searching until we find an attorney that will back us in a Chapter 7. We are kind of on a time frame though because we have a vehicle lease that is coming due in February. Can't trade before we file and can't do anything until after we are discharged. We will be way over on milage if we drag this out much longer.

[aces67]

I agree. No one should have to work that much. I do hope you find a solution soon!

[southernbelle]

I would definitely get a second opinion. Good luck to you.

[HHM]

How big is your household? Do you have any special expenses.

To be honest, with a mortgage of only $2325 and NET income of $7000+ per month, your attorney is right, you are not 7. There is no way you have "allowed" expenses that would eat-up that sort of income in order to qualify you for a 7 unless you are, perhaps a household of 7 or 8 people. You can get all the 2nd opinions you like, but unless there is more to this story, I don't see how you are a 7.

[Walangatik]

Whatever you do, do not let any attorney force you into a 13. This is how attorneys make money.

[BKParalegal]

Whatever you do, do not let any attorney force you into a 13. This is how attorneys make money.

Just a FYI on that, in reality, attorneys make less on a Chapter 13 than a 7. The fees in a 13 are set by the courts, and it takes a fee app to get beyond the standard fees set by the courts. 7's are much cleaner, faster, and more profitable.

In regards to the income issue, HHM, for the most part is correct. A net income of $7k+, depending on your household size, it is going to take alot of secured debt (car loan, mortgage etc.) and some high allowable expenses (medical and dental expenses, life insurance, charity etc.). You have to remember that just what you shows as expenses on Schedule J, doesn't direcly factor into expenses in the means test. For example, food, utilties, vehicle operating expenses, are all capped on the means test. It is an art and a science to get high income earners to pass part 2 of the means test. Unfortunately, most, alot, all, of attorneys I have worked with, the math part of bankruptcy is their kryptonite.

You can always refile a 13, stay in it a year, and look at converting to a 7.

Good Luck

[OhioFiler]

Can you provide us with an itemization of your $7600 monthly expenses?