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Positives and Negatives: Filing Chapter 13

Positives:
One good thing about Chapter 13 bankruptcy is that the trustees never want to take your property.

Another good thing about Chapter 13 trustees is that when they run out of people to pay, they will stop taking money from you. The trustees are good at keeping track of money. You can get access to the records from your case to see how much you still need to pay and how much will need to be paid to pay all of your creditors in full.

 

Negatives:
One bad thing about Chapter 13 bankruptcy is that the trustee will want as much  money as possible paid as quickly as possible. I have begun to tell clients that the trustee will always have his hand out seeking any additional money that comes their way.

It doesn’t matter to the Chapter 13 trustee if you have a plan that pays your creditors in full within 36 months. If he thinks that you can pay the creditors off faster, he will object to your  plan. His thinking is that something might happen to disrupt your ability to pay so he should get the creditors paid as quickly as possible.

Feel cheated by your previous attorney?

Attorneys have to disclose all payments received from clients. If you don’t think that you received credit for all the payments made to your attorney, you can contact the bar association or the U.S. Trustee’s office to register a complaint.

 

Southwest Louisiana Bar Association
1011 N Lakeshore Dr, Lake Charles, LA 70601
(337) 497-0090

US Trustees Office
6305 Ivy Ln # 600, Greenbelt, MD 20770
(301) 344-6216

Can I convert my bankruptcy?

Chapter 13 cases can be converted to Chapter 7 cases. If you are in a chapter 13 case, and have second thoughts about staying in it, you can ask your attorney, or a different attorney, about converting the case to a Chapter 7 case. Your Chapter 13 attorney might not want to help you convert the case because he often will lose his fee if the case is converted early into the case.

Should I pay my car note through bankruptcy?

Car notes can also be paid outside of a Chapter 13 plan of reorganization. Often the client is better off paying for the car himself, outside of the bankruptcy Chapter 13 plan of reorganization. If your attorney tells you to stop paying your car note, on a car that you want to keep, ask him how you benefit by not continuing to pay for it yourself. If he can’t give you a good reason, call our office at 337-494-1023 for a free consultation

Should I pay my house note through bankruptcy court?

No. There are lots of reasons not to pay a house note through the bankruptcy court. The bankruptcy court charges a fee of 5% on regular home payments and 6.7% on past due payments. The payments to the mortgage company are delayed by at least three months in each case which mess up the amortization schedule. The plan of reorganization has to be amended if the payments change. There are lots of other reasons. Get a second opinion from a second attorney if the first attorney recommends that you pay your current house note through the bankruptcy court. Call our office at 337-494-1023 for a free consultation

What should I do about my house?

Some local attorneys tell their clients to pay for their houses through their Chapter 13 plans rather than directly, even when the house payments are not in default. Chapter 13 debtors have the option to pay their house notes themselves and not through the bankruptcy court. The reason an attorney doesn’t recommend direct payment may be because the attorney can charge a higher fee if the house is in the plan.

Is it right for me to file?

One of the things I discuss with potential bankruptcy clients is what will happen if they choose not to file a bankruptcy petition. I believe that bankruptcy should be a last resort. I tell about half of the people that I talk to that they don’t need to file for bankruptcy. I suspect that other bankruptcy attorneys don’t discourage anyone from filing.