Chapter 13 - What should I do?

[tony7498]

Hey everyone!

I'm posting here today to get some insight on a complex Chapter 13 situation I've found myself in. I'm 31 months into a 54-month Chapter 13 plan and my trustee has filed a motion to significantly increase my monthly payments.

The issue stems from an error by my attorney(who I am firing), who failed to file an updated budget and income schedule after my financial situation changed last year. In a nutshell, my income went up from 95k to 190k per year, they didn't file the correct paperwork with the court and now the trustee is demanding arrears which if I agree would put me in the negative every month until my plan is done.  

The Problem: The trustee is demanding 100% of what she estimates should have been paid into the plan during that period, which amounts to a hypothetical arrearage of around $60,000. She's not willing to negotiate, citing that I should have known to set money aside regardless of my attorney's actions. A payment of this size would make my plan unfeasible and put me in a negative cash flow position every month. My income has also dramatically decreased to $125k salaried and I just don't have the money to pay 100% of what the trustee wants. 

My Financials:

• Net Monthly Income: ~$6,400

• Monthly Budget (not including trustee payment): ~$4,000

• Current Trustee Payment: ~$1,400

The Proposed Solution: I've hired a new attorney who is proposing a strategic compromise:

1. File new, accurate budget and income statements.

2. Offer a lump sum of $17,500 (this year's underpayment) into the plan.

3. Extend the plan to the full 60 months and propose a new, feasible monthly payment that I can actually afford.

My attorney believes this is our best shot, but that it's a "coin toss" whether a judge will approve it over the trustee's objection.

Has anyone been in a similar situation where a trustee demanded a large arrearage due to a prior attorney's error? If so, can you comment on that or just a recommendation on what I should do? I just am so upset my previous law firm basically commited malpractice by not filing new income and budget motions correctly and I am penalized for it.

[FicoMike0]

So what happened to the $60,000? Did you bury it in a mason jar in the backyard?

[tony7498]

Most of it was spent on necessary house repairs, car repairs, medical bills, paying down my student loans and I contributed a lot more towards my 401k. I can definitely provide that to the trustee if needed but my main argument is how can the law firm that represented me not be held liable for malpractice? I have proof of them lying that the new income and budget was filed with the court and provided everything they asked for.

I also called in several times a month the last year trying to keep track of what was going on and they always said everything was OK.