Question:

Chapter 13 payment way too high!?

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Okay, we have been having lawyer problems while trying to file our chapter 13. First she said that she would figure our payment and get back with us in a week after our first meeting so we could decide if this is the route we wanted to take or not. We did not hear from her for over 8 weeks. We left messages and called and called and no one ever answered the phone or returned our messages. Today my husband walked into their office and surprised them demanding information. The paralegal told us that she figured our payment and it seemed a little high so she was going to have the attorney re figure it for us. She said she figured $2000 per month! Hold on...there is now way we could afford that .We make about 100,000 per year and have 3 kids. Our house payment is 2,200 per month...we maybe bring home about 4900 per month...if we paid out $2000 per month for 5 years that would be almost 125,000 and our debt only totaled about 70,000! Please help!

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  1. Maybe you should fire that lawyer and find another.

    Have you considered going thru credit counseling?  Check here for CCCS in your area:  http://www.nfcc.org/.  They are a legit, non-profit companies and can look at your finances and advise how to proceed.  They have a debt management program which might be better than that attorney's plan.


  2. Are you factoring in interest on top of what you borrowed or are you just factoring in amounts borrowed?

    If your debt only totaled $70k, why are you declaring bankruptcy?  Have you already tried negotiating with the creditors for a repayment plan?  To be honest, that dollar amount with your income is not that bad.

    If you are still insistent on doing a BK, it sounds like you need to get another attorney.

    BTW, you need to check your figures...based on what you have put here, you are bringing home barely 50% of your gross income.  Maybe it is also time to examine getting a cheaper place to live and getting help on how to balance your budget?

  3. First if the lawyer took 8 weeks to get back to you, you need to get a new lawyer.  I know that may be easier said than done, especially since you have "retained" her services.  But when you did, you probably filled out some paperwork that stated the duties and responsibilities.  If there was a time restriction listed you may be able to get your money back.

    As to your expenses.  You stated that you are paying $125K over 5 years.  That discharges(clears) your debt and is effectivly 0% interest.  The 70K you are talking about is if you paid it off right now, and I would bet that you are not paying 0% on any of your debts now.  Also, would that be paid off in 5 years?  So you have to factor that into this.  

    When your payments are calculated the courts have guidelines as to what is considered a "necessity" and what is considered "luxury".  So you may have some expenses that they consider luxuries and don't count in computing your payment plan.  You will also find that most of the $2000 they are requireing you to pay goes toward your secured debts(house and cars) so it probably can't be reduced by much.  So while you may think that $2000/month is not "fair", it was probably computed based on the information you gave them.  They have software that does all of this and unless the paralegal typed in some wrong information or you gave them wrong information you can probably figure that it is correct(or at least close).

    If you want to confirm this and for peace of mind you may want to consult with another attorney and give them the same information.  Most will give you a short free consultation and may be able to tell you if it is within reason or totally wrong.  If you do this you should disclose that you are with another attorney and looking at other options.

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