I just fired my attorney

[womanonfire]

Two of the attorneys that I was working with left the firm to the clerk. I was being billed hourly per agreement because the plan was to file an objection to the mortgage claim and claim for recoupment and that never happened. I got a loan mod instead and the mortgage company modified its claim to remove all fees and arrears.

I would have saved about $4000 for a standard flat fee Chapter 13. Furthermore, since only partners are left with the firm, they want to charge me 400 per hour now lol. I already feel like I was taken advantage of.

So here I am, post-confirmation, post-modification in a 100% plan and now I need to amend my plan because the original plan calls for a 36-month plan of $1925 per month, and since there are no arrears to be paid AND several creditors did not file claims, the total amount of plan payments would have me paying off the plan way before the 36-month mark. I would rather have extra cash in my own savings account each month and for that reason, I am going to try and amend the plan to 60 months.

One thing that I could never get an answer on that made sense is why would lower income folks be forced into a 36-month plan rather than a 60-month plan if they are paying 100%?

[justbroke]

One thing that I could never get an answer on that made sense is why would lower income folks be forced into a 36-month plan rather than a 60-month plan if they are paying 100%?

The code doesn't force anyone into a 36-month plan over a plan of 38, 39, 40, 45, or even 58 months. The plan requires whast is known as the minimum applicable period. That just sets the least number of months a debtor has to propose for a plan that is less than 100%. The maximum period is 60 months. A debtor that is under the median, and not paying back 100%, must propose a plan that is at least 36 months. A debtor that is over the median, and not paying back 100%, must propose a plan that of 60 months.

I think the kicker is that many don't know that an under-the-median debtor, or any debtor in a 100% plan, can propose a plan up to 60 months in length.

How you ended up with a plan with such a large payment is difficult go gauge. It could be that it was calculated at 36-months, 100%, with all the scheduled creditor potential claims. If the plan was confirmed before all the claims came in, I can see where the plan could have a significantly large payment, paying off the plan quicker than 36-months, when all scheduled creditors don't file claims.

I agree with you that if I were in a 100% plan, I'd put in a plan for 60-months regardless... and pay the 100% over that 60 months. However, some attorneys and many trustees will push to have a debtor pay their DMI to pay it off earlier.

[womanonfire]

I think the kicker is that many don't know that an under-the-median debtor, or any debtor in a 100% plan, can propose a plan up to 60 months in length.

How you ended up with a plan with such a large payment is difficult go gauge. It could be that it was calculated at 36-months, 100%, with all the scheduled creditor potential claims. If the plan was confirmed before all the claims came in, I can see where the plan could have a significantly large payment, paying off the plan quicker than 36-months, when all scheduled creditors don't file claims.

I agree with you that if I were in a 100% plan, I'd put in a plan for 60-months regardless... and pay the 100% over that 60 months. However, some attorneys and many trustees will push to have a debtor pay their DMI to pay it off earlier.

When I first hired the law firm, the attorney I talked to did not end up representing me. I was passed off to someone else that seemed inexperienced. I told him I didn't want a 36-month plan and he never corrected it. So you are right, the kicker is that he obviously didn't know that he could or should put me in a 60 month plan. And you're also right that the large payment was based on all the schedule claims which all creditors did not file. I got rid of $30,ooo of schedule debt just because not all the creditors filed.

I went ahead on my own and started paying less based on the mortgage modified claim. But it is still more than I should be paying even at 36 months. If I take the total amount of claims, subtract what has been paid and divide it by 36 months, my monthly payment only be $906 a month.

A couple of months ago, my mother who had broken her hip, rehabbed at my home and I reduced my hours to 20 per week temporarily. I also interviewed and got a new job that I'm supposed to start November 7th. I put in my notice of intent to resign from old job and they let me go early. So I have not worked for all of October.

One of the reasons I was looking for a new job other than more money and better benefits is that I feared a lay off from old job. Now new employer may not accept my medical exemption from Covid vaccine and may rescind offer. It's crazy that they require 100% remote workers have the vaccine because they are a government contractor. UGH! I don't even know if I want to bring up income at all in a plan modification/amendment. I guess the only other concern is that the attorney Trustee would try to make me pay interest to creditors. All I want to do is to be able to save money if I can in a freaking recession.

I will know more about my job next week. I have to be fully hired on by Oct. 28th and if not, I am then officially unemployed.

[womanonfire]

Another thing that I wanted to add is that the last attorney said to me that now that the mortgage was modified, I could dismiss Chapter 13. This is how out of touch with my case that he was and horrible advice.

1. I have IRS debt that is included in my plan that I do not have to pay interest on. It would be stupid to continue to try to pay them off outside of Chapter 13 at 9+ % interest or whatever it is. Been there and done that. I would be making payments to them for the next five years or so anyway. Also that $30,000 in claims will be discharged once completed can't come back to haunt me. If I dismiss my case, those creditors could then come after me.

[justbroke]

Not to mention that if you dismissed... all the unsecured creditors would come back at you with a vengeance. Those that never filed a claim now have a "claim" and could file suit.

I think that an attorney may make off-the-cuff remarks, at times, when they may have been better off qualifying the response. In some cases, it could be advantageous to dismiss a Chapter 13 if the only issue were arrears on a mortgage, but that mortgage was refinanced/modified current.

This is another example of why Chapter 13s are complex and each answer requires that the person responding qualifies their answer.

[womanonfire]

Not to mention that if you dismissed... all the unsecured creditors would come back at you with a vengeance. Those that never filed a claim now have a "claim" and could file suit.

I think that an attorney may make off-the-cuff remarks, at times, when they may have been better off qualifying the response. In some cases, it could be advantageous to dismiss a Chapter 13 if the only issue were arrears on a mortgage, but that mortgage was refinanced/modified current.

This is another example of why Chapter 13s are complex and each answer requires that the person responding qualifies their answer.

Exactly! My attorney forgot about all of that thinking Chapter 13 was filed solely because of the mortgage but it was not. I actually really, really personally liked both of the attorneys who assisted me. Now they are both gone. All I knew about my new representation was he charged me $400 to read the confirmation order that was not even a quarter of a page long.

I get it that attorneys spent a lot of time and money on school and deserve to get paid high dollar amounts but I am not one of those that can afford it and my Chapter 13 is no longer complicated, it is very standard and boring.

[flashoflight]

Plan modifications are not included with the no look fee. If you had not fired your attorney, you'd still have to pay them extra anyway. In my area, you should expect to pay another $1500 for a plan mod. You can put this fee into your plan.

I paid $16k to my attorney for various things. Granted, I didn't have a 100% plan so my creditors paid a good portion of those legal fees. So I was probably on the hook for half of it with my unsecured creditor's dividend taking the hit for the rest of it. Money well spent.

[Carmella]

Plan modifications are not included with the no look fee. If you had not fired your attorney, you'd still have to pay them extra anyway. In my area, you should expect to pay another $1500 for a plan mod. You can put this fee into your plan.

I paid $16k to my attorney for various things. Granted, I didn't have a 100% plan so my creditors paid a good portion of those legal fees. So I was probably on the hook for half of it with my unsecured creditor's dividend taking the hit for the rest of it. Money well spent.

We had to pay a fee, which went into the BK, to the attorney when we filed to get permission to buy a car after our car was totaled in an accident.

[womanonfire]

Plan modifications are not included with the no-look fee. If you had not fired your attorney, you'd still have to pay them extra anyway. In my area, you should expect to pay another $1500 for a planned mod. You can put this fee into your plan.

I paid $16k to my attorney for various things. Granted, I didn't have a 100% plan so my creditors paid a good portion of those legal fees. So I was probably on the hook for half of it with my unsecured creditor's dividend taking the hit for the rest of it. Money well spent.

Your case was really unique and your attorneys really smart. I feel like mine has cost me more even outside of the fees bad. The loan modification was not in our best interest. Sure it reduced the arrearage but now we're what is like a new 30-year loan where the majority of our payments are going to interest. It is my understanding that we could have been paying over 60 months instead of 36, thus being able to sock away money and/or use the savings to pay extra toward the mortgage which was the selling point of the mortgage modification.

I know that plan modifications are different and not included. I have still overpaid for what I have received. I was billed hourly for prep for an adversarial proceeding that never happened, my attorney talked me into a mortgage modification that was not in my best interest and that I could have easily negotiated for myself and probably with better terms.

[PurplePanda]

Plan modifications are not included with the no look fee. If you had not fired your attorney, you'd still have to pay them extra anyway. In my area, you should expect to pay another $1500 for a plan mod. You can put this fee into your plan.

I paid $16k to my attorney for various things. Granted, I didn't have a 100% plan so my creditors paid a good portion of those legal fees. So I was probably on the hook for half of it with my unsecured creditor's dividend taking the hit for the rest of it. Money well spent.

I am in CH13 learning mode and I am hoping someone can explain the concept of this to me. How do unsecured creditors take a hit for legal fees?

[flashoflight]

I am in CH13 learning mode and I am hoping someone can explain the concept of this to me. How do unsecured creditors take a hit for legal fees?

Sure. I assume it's less than a 100% plan. It doesn't work with 100%. In bankruptcy, there are various classes of creditors which determines who gets paid first. The totem pole starts at the top with the trustee fees, then lawyer fees, then secured arrears, and finally priority arrears. After that, it's the unsecured creditors at the very bottom. Because credit cards are last, they may get only pennies on the dollar. To make this simple, let's pretend there are no secured/priority arrears.

Unless there is a different local rule, the trustee has to pay out the trustee cut, then all of your lawyers fees before the credit cards get a dime. Once your lawyer gets paid in full, the credit cards start getting money from the trustee after the trustee cut. But you need to do a plan mod at month 40. The lawyer adds his fees. The lawyer gets paid in full again months 41 to whatever month needed to pay it off before the credit cards get any additional payments in the remaining duration of the plan. Once the plan reaches 60 months, too bad game over for the credit cards. But your plan has to pay 100% of the trustee fee, lawyer fee, secured arrears, and priority arrears no matter what.

As far as the absolute minimum dividend to credit cards, there is a floor that is theoretically the highest of your means test, your I&J, or the amount of non-exempt property you want to keep. You always have to pay all of your disposable income I&J, but it can't be less than the floor even if you don't make enough. In some districts, they don't like it if your plan pays everything to the lawyer and nothing to creditors which is a backdoor chapter 7. Also once you have a 0% plan or the minimum dividend, your unsecured creditors cannot pay for anymore legal fees through the plan. Your plan payment is paying for all of the senior must-pay creditors. That's when you'll have to pay the lawyer direct just like a 100%.

[flashoflight]

Your case was really unique and your attorneys really smart. I feel like mine has cost me more even outside of the fees bad. The loan modification was not in our best interest. Sure it reduced the arrearage but now we're what is like a new 30-year loan where the majority of our payments are going to interest. It is my understanding that we could have been paying over 60 months instead of 36, thus being able to sock away money and/or use the savings to pay extra toward the mortgage which was the selling point of the mortgage modification.

I know that plan modifications are different and not included. I have still overpaid for what I have received. I was billed hourly for prep for an adversarial proceeding that never happened, my attorney talked me into a mortgage modification that was not in my best interest and that I could have easily negotiated for myself and probably with better terms.

My adversary was paid outside the plan via a contingency fee arrangement, but I had to front the court filing fee and some of his fees. He knew I would probably win. I would not have done the AP unless my lawyer was 90% sure of a payday. When I settled with the evil creditor, my lawyer got paid the rest of his fees.

Loan mod was not a good option for me. On my journey, I refused the court sponsored loan mod option suggested by my lawyer. My lender also sent my lawyer a letter suggesting a loan mod as well. That was the one time he offered a bad option for me. It had $3000 in fees with no guarantee of success and my numbers don't work for a loan mod anyway especially since the credit cards would get a big payday from erasing the mortgage arrears on my 1% plan so I passed on it. I should benefit from removing the arrears, not American Express. My main goal was to get rid of the HELOC which was exiting the interest only period before my BK ended with an 18% cap on the rate. My lawyer didn't know I worked on my credit already and could already qualify for a chapter 13 refinance mortgage. I had already received mail from other lenders offering chapter 13 cashout mortgages to buyout the 13, so I knew refinance was probably the path of least resistance. I got quotes from several lenders since I knew chapter 13 lenders had kinda predatory rates. I wanted to pay market rate, not predatory rates. I ordered a HELOC and 1st mortgage payoff and that was sent to the lawyer instead of me which alerted him of my plans to refi rather than do the court loan mod. It turns out working on my credit without telling my lawyer during the first 18 months was critical because rates rose fast after that. I did the purchase one candy bar once a year on the credit card or store card per year thing and paid off the balance the following day.

And the rest is history.

[womanonfire]

My adversary was paid outside the plan via a contingency fee arrangement, but I had to front the court filing fee and some of his fees. He knew I would probably win. I would not have done the AP unless my lawyer was 90% sure of a payday. When I settled with the evil creditor, my lawyer got paid the rest of his fees.

Loan mod was not a good option for me. On my journey, I refused the court sponsored loan mod option suggested by my lawyer. My lender also sent my lawyer a letter suggesting a loan mod as well. That was the one time he offered a bad option for me. It had $3000 in fees with no guarantee of success and my numbers don't work for a loan mod anyway especially since the credit cards would get a big payday from erasing the mortgage arrears on my 1% plan so I passed on it. I should benefit from removing the arrears, not American Express. My main goal was to get rid of the HELOC which was exiting the interest only period before my BK ended with an 18% cap on the rate. My lawyer didn't know I worked on my credit already and could already qualify for a chapter 13 refinance mortgage. I had already received mail from other lenders offering chapter 13 cashout mortgages to buyout the 13, so I knew refinance was probably the path of least resistance. I got quotes from several lenders since I knew chapter 13 lenders had kinda predatory rates. I wanted to pay market rate, not predatory rates. I ordered a HELOC and 1st mortgage payoff and that was sent to the lawyer instead of me which alerted him of my plans to refi rather than do the court loan mod. It turns out working on my credit without telling my lawyer during the first 18 months was critical because rates rose fast after that. I did the purchase one candy bar once a year on the credit card or store card per year thing and paid off the balance the following day.

And the rest is history.

Well played my friend!

If I get my plan modified, I can afford extra principal payments that will put me in the same or a similar situation as I was before the bad loan modification. That was the selling point along with not having to worry about foreclosure if something really bad happens and I can't make the BK payments.

I hope you take a look at my plan modification thread and give me feedback on it since you know a lot about the process. I'm still doing research to be fully prepared for the Trustee's objection.