Are there a lot of bad BK attorneys out there?

[cupcake]

Here's why I ask:

I absolutely trust my BK attorney 100%. Actually, I work in a law firm and he is who we refer our clients to when they need to file for BK. And, he's a family friend of one of the partners of the law firm where I work. I met with him a couple weeks ago and he told me to have my wages reduced so that I can qualify for Chapter 7 (my wages are a couple thousand over my state's median). My husband and I will soon be filing for divorce and he suggested that he do the same - request that his wages be lowered so that he also qualifies. Then, in six months, we file for Chapter 7 individually.

My husband met with "his own" BK attorney today and he was told that there is no way that would work for him (the reduced wage plan) and that his only option was Chapter 13. He said that requesting reduced wages in his case would not be in good faith and that the trustee would see through what he was trying to do. He said that the trustee would see his prior years' income and suggest abuse or fraud. My husband's wages for the last two years were approximately $7,000 over the state median but around $4,000 of that was for vacation days that he didn't take and instead cashed in.

Anyway, this attorney would not even discuss the possibility of him filing for Chapter 7 and wanted to get him signed up TODAY for a Chapter 13, filing his case with the court tomorrow. When my husband said that he wanted to hold off and explore more options the attorney jumped all over him about it and put a ton of pressure on him to go the Chapter 13 route RIGHT NOW. Do attorneys benefit more from a Chapter 13 than from a Chapter 7? My husband also said that the attorney was rude, judgmental and an absolute jerk.

Any insight? Thanks!

[bmrigs]

Yes that attorney was out of order. Ch. 13 costs more than Ch. 7 so that could be one reason why that lawyer was so persistent. The more I read on here about lawyers and how they dish off most of the workload to their paralegals and dont return calls, the more I will probably take my chances and do it myself.

[soleprop]

wwwwow. well i can say that i have not heard about very many *good* bk attorneys on this forum. there are the few and far between that are honorably mentioned...my guess is most people seek out a supportive forum like this because they're not getting the support in any other fashion.

those who post here and have attorneys i pay particular attention to because...well because they've paid for assistance and i am curious if they get what they paid for.

i'd say if you can at all go to a recommended attorney; picking one out of the yellow pages or online based on their advertising is a lot like russian roulette.

[Help!]

I agree with your husband's attorney on the reduced wages. That kind of maneuvering could be seen as fraud and those cashed in vacation days would be included as income on the means test anyway.

I disagree with the attorney that your husband MUST file 13. It may be that the attorney isn't willing to take on what could be a challenging Ch. 7 case. Your husband should gather up his documents and do the means test with real numbers (things he has receipts for) to determine where he stands.

In my opinion, most BK attorneys are out to make money with as little effort as possible. The attorney can charge more money for a Ch. 13, and with the debtor paying back their debt there are fewer complications that would create more work for them.

Trust your instinct (and husband should trust his). If you have a bad feeling about the attorney or he's doing what's best for him (not you) - walk away!

[cupcake]

I agree with your husband's attorney on the reduced wages. That kind of maneuvering could be seen as fraud and those cashed in vacation days would be included as income on the means test anyway.

Really? That concerns me because my wages were just slightly over (a bit less than $2,000) the state median for a Chapter 7 filing. However, in February, I got an unusual bonus from my employer (nearly $5,000 take home) and I just withdrew some money from my 401(k) (nearly $6,000 take home) and so that increases my one year income significantly. My attorney is aware of both of these income sources - he had no problem with me withdrawing the money from my 401(k) - but we are still going forward with a Chapter 7 in six months. If my husband's situation could be seen as fraud, couldn't mine also be seen that way?

[Help!]

Really? That concerns me because my wages were just slightly over (a bit less than $2,000) the state median for a Chapter 7 filing. However, in February, I got an unusual bonus from my employer (nearly $5,000 take home) and I just withdrew some money from my 401(k) (nearly $6,000 take home) and so that increases my one year income significantly. My attorney is aware of both of these income sources - he had no problem with me withdrawing the money from my 401(k) - but we are still going forward with a Chapter 7 in six months. If my husband's situation could be seen as fraud, couldn't mine also be seen that way?

As long as the unusual bonus is before the 6 month period ending on the last day of the month before you file, it would not be counted as income on the means test. The part that I think could be seen as fraud would be you or your husband asking an employer to pay you less for the next six months, with the intent (even if it is unspoken) to make your income appear lower on the means test.

If you were asked at your 341 hearing why your income decreased when your most recent tax return showed a higher income, you would be put in the uncomfortable position of explaining under oath why your income dropped. Not worth the risk, in my opinion.

[Dirk Squarejaw]

Really? That concerns me because my wages were just slightly over (a bit less than $2,000) the state median for a Chapter 7 filing. However, in February, I got an unusual bonus from my employer (nearly $5,000 take home) and I just withdrew some money from my 401(k) (nearly $6,000 take home) and so that increases my one year income significantly. My attorney is aware of both of these income sources - he had no problem with me withdrawing the money from my 401(k) - but we are still going forward with a Chapter 7 in six months. If my husband's situation could be seen as fraud, couldn't mine also be seen that way?

If you are only $2k over median, why not just file a Chapter 7 and be done with it? I'm about $5k over median and with my monthly expenses, I come out negative on paper. My attorney never batted an eye when asking about chapter 7 or 13. In fact, chapter 13 was never even brought up until I asked.

[Flamingo]

Really? That concerns me because my wages were just slightly over (a bit less than $2,000) the state median for a Chapter 7 filing. However, in February, I got an unusual bonus from my employer (nearly $5,000 take home) and I just withdrew some money from my 401(k) (nearly $6,000 take home) and so that increases my one year income significantly. My attorney is aware of both of these income sources - he had no problem with me withdrawing the money from my 401(k) - but we are still going forward with a Chapter 7 in six months. If my husband's situation could be seen as fraud, couldn't mine also be seen that way?

If your attorney has no problem with you withdrawing money from your 401(k), I suggest seeking another attorney. First, your 401(k) money is exempt from BK and that is the last thing you should touch ever - you will have a 10% penalty on the entire amount you withdrew and if you had $6,000 take home, that's just $600 right there before you add any taxes you had held out (10% is on total sum withdrawn, before taxes). A good attorney would have told you to leave that money alone. We did the same as to my husband's 401(k) (withdrawaing it completely) and could kick ourselves from here to the next Galaxy as we used it to pay bills to try to avoid filing. We could have had all that money to this day.

As to decreasing income prior to filing, that is an old trick that trustees are well aware of. Trustees are not stupid and your attorney could be setting you up for some major problems if he is suggesting to cut your wages and your husband to cut his wages.

[xocoach]

I've heard from three different attorneys (not bankruptcy specialist) who are casual friends of mine that the Trustee has extreme latitude in bending the rules if they so choose. Any truth to that?

[Help!]

Not when the UST is involved, in my opinion.