"The Attorney Group" first took $1,280 from me for a Chapter 7 bankruptcy. When they went over my papers they said I made too much money, and that I would have to do a Chapter 13, for which I had to give them another $930. I find that when settled, I would have to pay $703.43 per month for 60 months, which is $42,205.80, while my original debts totaled $33,938. Due to the attrocious extra cost, I cancelled the bankruptcy, and the lawyers refuse to return any of the $2,210 That I have given them. I'm on fixed income and will be 80 next year. Is there anything I can do?
Chapter 13 bankruptcy typically costs more then the underlying debt due to trustee fees and attorney fees that need to be paid in the plan.
In your area, the Chapter 13 trustee can charge as much as 11% to administer your Plan. Your figures show you are paying $8267 over the total amount of your debts over 60 months, That translates into less than 5% for trustee's fees for 60 months. You must have had the Plan approved paying 100% to your unsecured creditors. If you're on a "fixed income" it must be "fixed" higher than normal. Without knowing more details, it is impossible to confirm you were not eligible for a Chapter 7. That said, it is highly unlikely you will not get any of the $2210 you paid. A Chapter 13 case is far more complicated/involved than a 7. That is a relatively low fee for a Chapter 13 case. The local rules allow attorneys to get as much as $4500 for a Chapter 13 case. Sorry to be the bearer of bad news.
You are not my client and I am not your attorney. This advice is given in the spirit of the AVVO platform and is based on general legal principles. You become a client when you enter into a formal retainer agreement with me.
Attorneys fees and trustee commissions add to the costs. But whether you should have to file a 13 instead of a 7 we do not have enough info to give you an informed opinion on. I recommend you consult with another attorney or two who can review your information and give you an informed opinion.
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Get a second opinion from a local bankruptcy attorney in your area. Chapter 13 can be very complex. Chapter 13 Trustee imposes an 11% distribution fee on the amount distributed to your creditors.
A lot of fine attorneys have already explained the wonderful concept of "chapter 13's are expensive" so I won't bore you. What I will do, though, is offer a side noe:
$9k (ish) over your actual debt tends to feel like what's called a "100% plan" (i'll save space and not explain what that is. ask somebody). 80 years old on a fixed-income means your attorney did something wrong if you're in a 100% plan. I'm sorry put it so harsh, and I'm sure i'll catch some flak, but I've never seen that. Unless your fixed income is retirement, pension, SSN, and a bunch of other stuff.
This is important because it means that, depending on your circumstance, a skilled attorney *may* be able to get that money back if it is clear that there was no hope. As a personal example, I recently took over a case and we were able, through the court, to force the debtor's prior attorney to refund all of the money that was paid because, in the eyes of the court (and "anybody sane") the debtor had no chance to prevail, so the argument was the attorney just took the money for unskilled work.
It sounds to me like you're the victim of one of those bankruptcy mill firms that just churns out bk after bk, without any attention paid, or cared, to the unique circumstance of the client. I would recommend talking to another lawyer and getting a second opinion. Something doesn't seem right.
When you pay your debts outside of bankruptcy, you pay INTEREST on top of the current principal balance. I see how you got into trouble figuring things out for yourself. When you consider what interest must be paid on debt outside of bankruptcy, the total you probably must pay to eliminate your debts is likely to be nearly $60,000, or even more depending on the interst rate. Had you talked to any accountant before deciding to bail on the chapter 13, this could have been explained in detail. Now you get to learn the hard way. Hope this perspective helps!
Don't use the email resource to ask me a private follow up question. The Avvo public forum lets all the volunteer attorneys respond. "Email" only if you wish to schedule a consultation.
I agree with most of my colleague here. The first step before allowing a case to get dismissed to to consult with your attorney and if you're not happy with that attorney, then seek a second opinion. The Central District of CA sets attorney fees at $5,000/$6,000 for business related cases. Chapter 13's are complex. You should only hire an attorney who has filed many chapter 13 cases SUCCESSFULLY. That means you need to do some homework as the consumer. Don't just hire the first person you see. 11% is NOT the trustee fee. It's the allowed percentage a trustee can be paid on a case. Here in the CDCA where we have a lot of chapter 13 cases, our trustee fee is about 5% right now. If you're on a fixed income and the attorney calculate your plan including any Social Security, the plan and means tests were likely calculated incorrectly. However, there are other factors, such as non-exempt equity that may require you to pay a higher plan if you want to keep those assets.
Chapter 13 is a great option to get rid of debt, even if you're in a 100% plan. You still save money and you rebuild credit quickly. Further, you don't have the 1099-Cancellation of Debt burden you would have outside of bankruptcy if you settled your debts.
Go see a qualified attorney and determine your options ASAP. A second filing may be worth it, but you will have a special motion to file since you let your case get dismissed.
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