The Chapter 13 BK case was filed in December 2010 and was confirmed in 2/4/2011. I have spoken to my attorney and he said I qualify but that it would be easier to let the Chapter 13 be dismissed and refile as a Chapter 7 stating he will cover the $299 filing fee and I have to pay $1000 more to him- I asked him why would that be cheaper if it only costs a $25 conversion fee and he came up with a whole bunch of stuff about him saving me money and looking out for me? I understand that he may want to charge me additional fees for his time but $1k? I am very confused how making me pay an additional $1000 would be in my best interest when I am still in the process of looking for a home for myself and my children and also a reliable but cheap vehicle. Any ideas or suggestions
I think your main question is why doesn't your attorney just convert the case, update the schedules, include your new debt and charge you the $1000 for the conversion instead of dismissing and refiling. I am baffled. If you had received a discharge in a Chapter 7 case within 8 years of filing the 13 you would not be eligible to convert and would have to dismiss. Refiling has two very negative consequences. The first is you will have two bankruptcies on your credit report. The second is that in the time between the dismissal and refiling creditors you owe can report on your credit report. This will slam any rebuilding or improvement you score has experienced since the filing of the Chapter 13. I suggest you get a second opinion from another attorney.
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Financial Markets and Services Attorney
Conversions aren't just the $25 fee and filing the form.
In the long run, another $1000 is a small fee to pay to get your unsecured debt completely discharged in a Chapter 7. Your financial situation also has most probably changed in the year since you filed your Chapter 13, in ways that could benefit a Chapter 7 if you file today.
If you want a second opinion, go and find another attorney. No attorney, though, is going to do a Chapter 7 conversion for free.
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Chapter 7 Bankruptcy Attorney
When you convert from a Chapter 13 to a Chapter 7, what does your attorney do other than pay a $25 filing fee?
Well, if I were representing you, I would have to prepare the motion & order to convert & notice it to all your creditors. I probably wouldn't have to make a court appearance for this motion, but the court is changing its procedures all the time, so I never know.
Then I would have to prepare & file a new Means Test under Chapter 7 as well as a new budget using your current income & expenses. Many times the US Trustee will step in to ask me to document the new budget items, so to be safe, I like to have them in the file, nicely organized.
Then I would prepare you for the Chapter 7 341 meeting. Since you are a conversion, I won't have any other cases on the docket for that hearing & you will be my only client for this trip to the courthouse. I will prepare a special Chapter 7 Trustee Questionnaire for you to review & sign (it is different from the Chapter 13 Trustee Questionnaire I already prepared for you,) I will have to get everything from the initial 341 to the Chapter 7 Trustee in the next 10 days. Sometimes the delivery charges for sending these documents to the Trustee can be over $25. None of my clients has ever offered to deliver the documents themselves or voluntarily pay for the runner service I have to use to make the deadlines for providing the documents to the Trustee.
Oh, by the way, have you paid me in full for the work I did on your Chapter 13? The balance you owed & the court awarded me is coming out of the Plan payments you were making. I may be losing $2,000 on work I have already completed for you. So why am I cutting my own throat to help you?
And I get to make another 341 appearance with you, and continue administering your case in the very likely case that the US Trustee has concerns about why you converted. But you are my client, I love you & I am just here to help you while you are free to complain about the fact that I have done nothing for you & am ripping you off.
Hope this perspective helps!
Chapter 7 Bankruptcy Attorney
You attorney is charging you $1,000 because he is doing additional work. The conversion filing fee may be $25 but the attorney has to continue working on your case, answering your questions, addressing trustee questions and requirements, and accompany you to a new 341 hearing.