topic Re: When different attorneys tell you different things in Bankruptcy

When different attorneys tell you different things

masscredit — Mon, 04 Oct 2021 17:51:07 GMT

I had a consultation with a BK attorney last month. He suggested chapter 13 after going over my info. Not because my income is high. I totally fall in the guideline for chapter 7. He said it's because I have about $150K in credit card debt so they will scrutinize that and because I don't have the best paperwork when it comes to being self employed. That could trigger an audit. He said a CH13 will go through a lot easier. There is a second BK attorney in his office who agreed with this after he ran the info by him.

I met with another attorney this morning. I brought the same paperwork and answered the same questions. CH13 wasn't even a thought. I told him what the other attorneys said when we were pretty much done. He said the credit card total isn't a big deal. They don't think anything of it unless it's a big number like over $500K. He also said my business paperwork is better than what he's seen from a lot of other people. He also said CH13 requires much more work by the attorney so the first one would be charging me a lot more after the course of the years that I'm playing. Attorney #1 never said anything about that.

This part might not matter, attorney #1 (and 2) had a nice big office with a receptionist up front. Attorney #3 met me at a satellite office which is just a table with a few chairs in one room. These attorneys are probably trying to sell us on their services when we goto the free consulatation. It's hard to know what is true and who is the best choice. Thoughts?

Re: When different attorneys tell you different things

MileHigh96 — Mon, 04 Oct 2021 18:58:26 GMT

My attorney worked out of a small office and another satellite office. Pretty much no frills kinds places. She was up front about filing both ways and that a BK13 costs far more to go thru than a BK7. So I would be a little hesitant that the first attorney(s) never mentioned that to you, that would be a red flag for me.

You will have to go with your 'gut' though when picking an attorney. What kind of feeling did you get from the second attorney you just met with? Like with my attorney, I felt extremely comfortable with her and I never doubted for a moment that she had my best interests at heart. She never steered me one way or the other but she definitely went over what I would be looking for costs.

The only other thing you could do is consult with one more attorney if you don't feel 'sold' by either one that you have met with so far. It's hard to make a decision on something like this, but like I said, go with your gut feeling as to what your impressions were of the attorneys.

Re: When different attorneys tell you different things

FireMedic1 — Mon, 04 Oct 2021 19:25:41 GMT

It comes down to the Means Test if you can file a Chapter 7 or 13. It takes into account your income, expenses and family size to determine whether you have enough disposable income to repay your debts. Although it was designed to restrict the number of debtors who can get their debts forgiven through a Chapter 7 bankruptcy, most people who take the means test pass it easily. Those who don’t qualify for Chapter 7 or who want to retain certain assets like a house or expensive car can choose instead to restructure their debts and pay them off through a Chapter 13 bankruptcy. Look up your states medium income for BK. If your current monthly income is less than the median income for a household of your size in your state, you pass. You're done. You do not need to complete the rest of the means test. You can file for Chapter 7.

Re: When different attorneys tell you different things

masscredit — Mon, 04 Oct 2021 21:08:05 GMT

At first my got feeling was I preferred the first attorney I spoke with. Probably because it was a law firm with a big room, nice desk, plenty of books in the cases... You get the idea. The guy was also very nice, friendly and seemed knowledgeable. Plus 26 years experience and many positive reviews. So I figured okay, he knows what he's talking about. The attorney I met with today was very casual and in the basic satellite office I mentioned. That really doesn't mean he doesn't have the knowledge and ability. It was just my first impression. I felt comfortable with him as the meeting progressed. And I much rather file ch7 over 13. Oh, as for his experience, he also has over 20 years and many positive reviews. I'm kind of torn but leaning towards the attorney I spoke with today. Probably because he seems to be able to do what I want. My income definitely qualifys for chapter 7.

I might speak with one more to see what he says. I've been looking for attorneys who specialize in bankruptcy, have many years of experience and mostly good reviews.

Re: When different attorneys tell you different things

jmw1 — Mon, 04 Oct 2021 21:14:04 GMT

@masscredit Contrarian opinion here.

If it was $150k in medical or lawsuit debt, I'd shrug and say it's fine.

But if it is $150k in credit card debt, what did you put down as income when applying for the credit cards to qualify for such high limits. Would it have been a number above the state median? Things go south and income can decrease after credit card applications, but your income is self-employed so it presents some additional complications.

IRS almost never verifies your stated expenses. Simple attestation or pinky promise works 98% of the time.

The chapter 13 trustees always check expenses that are above district guidelines and requires proof such as receipts. They don't take our word for it.

If your gross self-employed income is quite a bit above the median, I think you might be in trouble if you don't have receipts for the expenses listed on your tax return.

Your outcome will probably heavily depend on which chapter 7 trustee you randomly draw from the pool. Do you feel lucky?

Re: When different attorneys tell you different things

masscredit — Mon, 04 Oct 2021 21:27:30 GMT

@jmw1 wrote:
@masscredit Contrarian opinion here.

If it was $150k in medical or lawsuit debt, I'd shrug and say it's fine.

But if it is $150k in credit card debt, what did you put down as income when applying for the credit cards to qualify for such high limits. Would it have been a number above the state median? Things go south and income can decrease after credit card applications, but your income is self-employed so it presents some additional complications.

IRS almost never verifies your stated expenses. Simple attestation or pinky promise works 98% of the time.

The chapter 13 trustees always check expenses that are above district guidelines and requires proof such as receipts. They don't take our word for it.

If your gross self-employed income is quite a bit above the median, I think you might be in trouble if you don't have receipts for the expenses listed on your tax return.

Your outcome will probably heavily depend on which chapter 7 trustee you randomly draw from the pool. Do you feel lucky?

I have about 16 cards. Some of them are 6-8 years old so they're grown over time. One is a Cap1 with a 25K limit. That's from an account combination. My reported income has always been below the state medium of $81K. I've always reported it in the $70K-$75K range. Less over the last two years (Covid).

Re: When different attorneys tell you different things

CosmicCash — Mon, 04 Oct 2021 23:31:55 GMT

@masscredit wrote:
At first my got feeling was I preferred the first attorney I spoke with. Probably because it was a law firm with a big room, nice desk, plenty of books in the cases...

Don't let a big office or building fool you. That doesn't mean they are reputable attorneys or have your best interests at heart. i.e. Morgan and Morgan.

Re: When different attorneys tell you different things

jmw1 — Tue, 05 Oct 2021 05:43:35 GMT

I got the wrong vibe from one of the good attorneys in the area who had a small and messy office and a disorganized paralegal. Avoiding the big fancy office doesn't always work either.

Two years later, I found a case where Mr. Wrong Vibe filed a 7 for a client that should be have been a 13 all along. The main creditor was very unhappy along with the US Trustee. There was no chance the debtor could get a 7 because he couldn't document his expenses and his lawyer kept allowing him to amend his schedule J multiple times to try to save the case. The debtor had to pay all of the unnecessary extra legal fees and 100% of the debt. He could have just paid 100% of the debt and normal legal fees by going with the 13.

The attorney I ended up hiring is more on the conservative side and that works well with me as a very aggressive client. He convinced me to give up on the chapter 7 and that turned out to be the correct decision. There were many times I didn't want to agree with my own lawyer on the numbers or the strategy. We ended up working well together and he worked on my adversary case as well to a good outcome.

Re: When different attorneys tell you different things

MileHigh96 — Tue, 05 Oct 2021 14:21:40 GMT

@masscredit wrote:
At first my got feeling was I preferred the first attorney I spoke with. Probably because it was a law firm with a big room, nice desk, plenty of books in the cases... You get the idea. The guy was also very nice, friendly and seemed knowledgeable. Plus 26 years experience and many positive reviews. So I figured okay, he knows what he's talking about. The attorney I met with today was very casual and in the basic satellite office I mentioned. That really doesn't mean he doesn't have the knowledge and ability. It was just my first impression. I felt comfortable with him as the meeting progressed. And I much rather file ch7 over 13. Oh, as for his experience, he also has over 20 years and many positive reviews. I'm kind of torn but leaning towards the attorney I spoke with today. Probably because he seems to be able to do what I want. My income definitely qualifys for chapter 7.

I might speak with one more to see what he says. I've been looking for attorneys who specialize in bankruptcy, have many years of experience and mostly good reviews.

I wouldn't be swayed by an attorney just because they have a big and fancy office. Attorneys are like any other business, they are in it to make money and all a big and fancy office means to me is that they are expensive lol. Does that mean they aren't competent? Of course not, but that doesn't mean they won't steer you in a direction where they stand the chance to make the most money, and for BK attorneys, a BK13 makes them a lot more money than a BK7 does. There's more work for them to do of course in a 13, but they make sure they get paid for it.

As far as the second attorney goes, no good attorney is going to steer you in the wrong direction because that doesn't reflect well on them. And if you go over the means test with the attorney and you pass that, then there's no reason you shouldn't be able to file a 7 instead of a 13. As was mentioned, there is always the issue of the Trustee that will get assigned to your case and they vary a lot as to how hard they push. The Trustee I drew was not one my attorney was very enthusiastic about and she was worried he was really going to press me because of the house I owned (still have a hefty mortgage on it, but the real estate market in Colorado is REALLY over priced right now so there was a lot of equity on paper depending on what site you looked at) and she was worried he might push on our valuation. But he didn't and during my virtual 341 meeting he asked me the basic questions and never brought anything up. But the whole time my attorney was up front with what could happen, and worst case scenario that she broiught up was that we would just have to convert my BK7 to a 13 if the Trustee would have pressed on stuff.

YMMV of course, but definitely don't let an attorney steer you in a direction you aren't comfortable with. Like I said in my earlier post, it's just a red flag for me personally that the first attorney wouldn't even consider a 7 and didn't advise you of the costs involved in a 13. But that's just me and you have to ultimiately go with what your gut tells you. Good luck and please keep us updated.

Re: When different attorneys tell you different things

twono — Sun, 10 Oct 2021 01:46:03 GMT

I had similar consultations with 5 different attorneys.....

The first attorney i found out was also a trustee...She told me to wait to file because i was close to the 90 day or 6 month window for a large purchase or something like that...But i couldn't wait. I had a very small window income wise to qualify for a 7.

Another attorney said no way i could do a 7 unless I adopted my ex's son that was living with me so i would have a higher state income threshold to fall under.

Another firm also said no way on the 7 at that time.

And the 4th i just didn't like anything he had to say.

So the 5th and final firm i met with was pretty much, 'no problem, don't worry, give me this and that, get some rest and have a nice day'. 1/2 of this family firm was also a trustee and the other half was the county commissioner. They both worked my case. I was also audited by the US trustee. But all documents/explanations/amendments were provided and all was well. I paid a pretty penny for their services though, $4000 for a Ch. 7.

So i saw no less than 5 attorneys...researched my ass off and went with THE BK firm in my large-ish city.

p.s. The bk wasn't far from $500k.

Re: When different attorneys tell you different things

masscredit — Tue, 12 Oct 2021 00:41:22 GMT

I'm sitting here looking for a third attorney to have a consultation with. The first attorney (actually two, same law firm), the ones that said I should file Ch13, they are literally the top five listings on Google. I know... they can do things to have placement on the site but they have a lot of great reviews. I click on links then realize "Oh, that's them too". The other attorney also has a lot of good reviews. This is fustrating. Have been searching there along with avvo.com. Just came across another site which is nacba.org. I know personally know the first attorney on that list so I rather not use him.

Re: When different attorneys tell you different things

masscredit — Thu, 14 Oct 2021 21:35:21 GMT

I just had an hour long consultation with another attorney. He was leaning towards me filing Ch13 instead of 7. Attorneys 1 and 2 (same office) said the same thing. The main reason is the amount of credit card debt ($150K). He said the chances are slim but they might want to probe into that and request statements from the last few years. The other thing is me wanting to keep both cars. The used car market is kind of crazy right now so they are worth more than they should be. My main car is paid off. That would be the one I'd want to keep (normally worth $6K, maybe more in this market). I owe $19K on the other one. It's value was about that until recently. Now it has $6-$8K in equity so the two might exceed the car and wild card exemptions.

So I've talked to 3 attorneys (4 counting the guy in the same office). Most are leaning towards me filing Ch13 even though my income passes the means test for Ch7. If I went with a Ch13, he said I'd be looking at about $250 per month for 3 years. That's the same as the first attorney said. His additional fee for the Ch13 would come out of that.

Gut feeling after talking to this one... He seems to be a laid back guy who made a bunch of good points. I could go with a 7 and not have any issues or they could request some info. If the Ch7 road gets too bumpy, I could convert to a Ch13 and be done with it. I might talk to one more to see what he says. That means answering all of the same questions again.

Something I didn't know is certain trustees who handle certain areas. There are two for the area where I live. One is easier to deal with than the other.

Re: When different attorneys tell you different things

twono — Wed, 20 Oct 2021 08:46:34 GMT

The advice i was given by the smart people on here was, if you can do a 7, DO IT!

Not sure why this attorney suggests that $150k in CC debt would incur further scrutiny? And so what anyway. If everything is on the up and up, then there shouldn't be a problem.

My BK was audited by the US trustee, not just a city/county/district trustee. The US Trustee was actually sitting int he 10 person audience during my 341. And when the regular trustee asked if anyone here had anything to add or had a vested interest (i.e. a creditor) in my case, she abruptly stood up and introduced herself as such.

She asked if i had a business.....if any of the debt was from my daughter being an AU on a few cards. After the meeting, my attorney and the US Trustee talked for a while. He then said that she wanted a full credit report, and 1 or 2 other things that i can't remember what they were....but was not a problem.

The attorney said to get these things to him so we could 'get her off our back'. I never would have thought that was an actual audit, but it was.

Re: When different attorneys tell you different things

masscredit — Wed, 20 Oct 2021 13:44:31 GMT

@twono wrote:

The attorney said to get these things to him so we could 'get her off our back'. I never would have thought that was an actual audit, but it was.

The relationship attorneys have with the trustees is interesting. This comment sounds like something the attorneys I talked to would say. It seems to be very casual. Like "just get me this and this then we will be done with it". Or, as one said when referencing a previsous client's case, the trustee said "Just put him into a 13 and you won't hear from me again". I thought things would be much more formal.

Something that I meant to type in a previous post is one of the attorneys mentioned the BK cases are slow right now. The surge after Covid hasn't hit yet. The trustees don't have much to do so they are more likely to throughly look at everything instead of quickly pushing it through so they can get to the next case. I wondering if when I file would help with this.