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Are BK 7 and 13 payment plans available?


BrokeIn2011
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I am new to BK. Upon reading various forums and websites about BK, I was under the impression that you have to pay a sizable fee to retain a lawyer in order to get the BK started.

Yet since about 10 of my credit card bills are about 10 months past due, some of my accounts have been turned over to collection agencies. So I have been getting a steady stream of collection calls and letters when I roughly became 2 months past due. Though I owe around $100,000 in credit card bills, but no lawsuits thus far.

Yet I know that I must consider BK, since I have no other options, since I have had a chance to think about my financial situation over the past 10 months. Yet I am not sure if I will go with a 7 or 13. So needless to say, the bottom feeder help companies are sending me junk mail (right and left) regarding debt settlement and BK. Upon reading one of the pamphlets from a BK lawyer that arrived in the mail on Saturday, I see that this lawyer is offering a payment plan to do a BK 13. Again, I thought the norm was that you had to provide a lawyer a sizeable retainer in order to start the process (i.e. pay the lawyer enough money to field the collection calls and start the BK paperwork). At this point, I really want to get a lawyer, yet I just do not have a large amount saved, but I am more than ready to start answering my phone again and start telling my creditors to call my lawyer, since I am filing BK. Yet I did get advice to always pick my own lawyer and never to deal with the bottom feeder companies offering help (via the junk mail they send to me), since they had to stoop low in order find out my financial troubles to begin with.

Have any of you found lawyers that work with you on a monthly payment plan? If so, did you have to put a down payment (big or small or none) to get the ball to rolling? Mainly, I just want to try to get the collection calls and letters to stop. After 8 months of numerous daily telephone calls, I almost can not take it any more.

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I am not sure how it works in California but I assume it's the same all around the country with the recession. I know my friend has a bankruptcy attorney in which she pays the total amount, $1600, over four installments. If you don't think you have the money, most bankruptcy lawyers will tell you to stop paying the bills going into bankuptcy and pay for your bankruptcy. :) I believe her attorney has a cost of the initial fee, a cost for credit counseling, which is mandatory, however, you can take it on line via the attorney; there will be a fee when it's filed and so on. Since there is no charge for the initial consultation, it doesn't hurt to check out a few. I feel it's better is you know someone who had a bankruptcy attorney or possibly a friend of yours knows of one. :)++

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Not trying to be negative here, but IMO filing BK just to stop collection calls is not a compelling reason. Depending on your financial situation (assets and income), BK could be a very bad move. It is for me, hence my name here. In my case, I would lose my house.

I just took the landline phone off the hook and gave a cell phone number to people I actually wanted to talk to. At this point, 3 years after default, my landline is silent. Probably because I fight back. I send a DV letter to every collection agency that sends me a letter. I have sued collection agencies for violating the FDCPA, and I am apparently on the WebRecon naughty list. They don't want to play with me anymore. And the clock keeps ticking, meaning the statute of limitations will expire.

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The general rule is that if you do the math and find yourself insolvent (need to file BK) then what you do is stop paying all unsecured creditors and the secured creditors which you plan to forfeit the collateral on. You then save what you would be paying out to those creditors to pay for the attorney. Continue to pay secured creditors where you plan to keep the collateral or you may loose it in court.

The attorney generally will not file until you have paid all his fee up front plus the court costs. If you make a payment plan with the attorney, then once the first payment is made you tell any calling creditor you are represented by a lawyer and give the lawyer's number. From that point on the creditor has to stop calling you and only talk to the lawyer. Mail from creditors should be saved and turned over to the lawyer if asked for.

As for collectors, the FDCPA specifically prohibits collectors from calling once they know you have a lawyer representing you.

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I am new to BK. Upon reading various forums and websites about BK, I was under the impression that you have to pay a sizable fee to retain a lawyer in order to get the BK started.

Yet since about 10 of my credit card bills are about 10 months past due, some of my accounts have been turned over to collection agencies. So I have been getting a steady stream of collection calls and letters when I roughly became 2 months past due. Though I owe around $100,000 in credit card bills, but no lawsuits thus far.

Yet I know that I must consider BK, since I have no other options, since I have had a chance to think about my financial situation over the past 10 months. Yet I am not sure if I will go with a 7 or 13. So needless to say, the bottom feeder help companies are sending me junk mail (right and left) regarding debt settlement and BK. Upon reading one of the pamphlets from a BK lawyer that arrived in the mail on Saturday, I see that this lawyer is offering a payment plan to do a BK 13. Again, I thought the norm was that you had to provide a lawyer a sizeable retainer in order to start the process (i.e. pay the lawyer enough money to field the collection calls and start the BK paperwork). At this point, I really want to get a lawyer, yet I just do not have a large amount saved, but I am more than ready to start answering my phone again and start telling my creditors to call my lawyer, since I am filing BK. Yet I did get advice to always pick my own lawyer and never to deal with the bottom feeder companies offering help (via the junk mail they send to me), since they had to stoop low in order find out my financial troubles to begin with.

Have any of you found lawyers that work with you on a monthly payment plan? If so, did you have to put a down payment (big or small or none) to get the ball to rolling? Mainly, I just want to try to get the collection calls and letters to stop. After 8 months of numerous daily telephone calls, I almost can not take it any more.

One way to get the calls to stop is to send them a CERTIFIED LETTER, RETURN RECEIPT REQUESTED..."DEMANDING THAT THEY CEASE ALL TELEPHONE CALLS TO THE TELEPHONE NUMBERS THEY HAVE ON FILE....ALL FUTURE COMMUNICATION WITH YOU IS REQUIRED TO BE BY FIRST CLASS US MAIL ONLY".

THIS SHOULD STOP ALL CALLS !

Get those letters in the mail, my friend...and within a few days...your telephone should stop ringing !

With such a large debt (100K) as you stated, why not go for Chapter 7 BK...heck with a Chap13, you will be paying for a long time to come.

But first check your states bankruptcy laws...you might be surprised at the exemptions you have( personal and homestead)

Edited by Prosay
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Many folks who initially file Chapter 13 find they run into troubles keeping the "bargain" for half a decade or so. Of course, creditors much prefer a debtor filing Ch13 since they'll be able to get something...that is, if the debtor can afford the payments for an extended period of time.

At least, Ch 7 truly provides a "start-over".

I'm always a pro se advocate, while realizing it is not for everyone, and that some cases may be too complicated for a layman. My own BK experience was pro se, along with three other people I know. I had a very good book as a guide, which virtually covered everything. At the end of the day, I had saved the attorney fees, and felt really "proud" that I had accomplished the feat by myself.

In my own county in Florida, I just read that pro se filings were over 4,200 last year, up 81% since 2009.

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I agree with Methuss and feel you need to consider his advice along with my previous recommendation. The new bankruptcy laws made it so that you have no choice in deciding which one to take. There are IRS figures which determine which category you are eligible for. :cool: With the recession, most people qualify for the Chapter 7. :tempted:

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Regarding your initial question, in a Chapter 7 attorneys fees are always paid upfront. That's because in a Chapter 7, once you file any debt to the attorney must be included in the bankruptcy and are dischargeable. That makes your attorney an unsecured creditor and creates a disqualifiable situation due to the conflict.

In a Chapter 13, your attorney's fees are approved by the court as an administrative cost and are paid at 100%. Different situation, so payments plans are customary.

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Just to add a little to jq's post: many Ch 7 BK attorney's will take a "downpayment" on the Ch 7 and periodic payments for the fee. They will not file your BK until they are paid in full, including the filing fee, but you will then have an attorney name and number to refer your creditors to when they call. This alone will significately reduce the collections calls. Check with your attorney's office if they will take the calls before you refer them first!

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One way to get the calls to stop is to send them a CERTIFIED LETTER, RETURN RECEIPT REQUESTED..."DEMANDING THAT THEY CEASE ALL TELEPHONE CALLS TO THE TELEPHONE NUMBERS THEY HAVE ON FILE....ALL FUTURE COMMUNICATION WITH YOU IS REQUIRED TO BE BY FIRST CLASS US MAIL ONLY".

THIS SHOULD STOP ALL CALLS !

Get those letters in the mail, my friend...and within a few days...your telephone should stop ringing !

Good luck with that. Creditors don't have to stop calling on a C&D because they are not subject to the FDCPA. Nor must they stop calling under the TCPA as they have a prior business relationship. In all liklihood sending a C&D to the creditors will cause them to crank up the pressure making matters worse. Only 3rd party collectors have a legal obligation to cease calling under a C&D letter.

And before you go there, Prosay, I work in the banking industry and spent over half a decade supervising a large bank's law department. A C&D letter to a creditor gets your file forwarded from the collections department to legal almost instantly.

So that is Bad advice you are offering up.

Edited by Methuss
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Good luck with that. Creditors don't have to stop calling on a C&D because they are not subject to the FDCPA. Nor must they stop calling under the TCPA as they have a prior business relationship. In all liklihood sending a C&D to the creditors will cause them to crank up the pressure making matters worse. Only 3rd party collectors have a legal obligation to cease calling under a C&D letter.

And before you go there, Prosay, I work in the banking industry and spent over half a decade supervising a large bank's law department. A C&D letter to a creditor gets your file forwarded from the collections department to legal almost instantly.

So that is Bad advice you are offering up.

I guess some of my files have been sitting in the legal departments of some of them now for a long, long time because I have sent quite a few C &D's over the last several years. The C & D should not stand alone, but needs to be part of a broader letter...one which contains all the right language to fit any given situation. I guess that's why I have enjoyed peace and quite for a long time now.

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[quote name=Methuss;

As for collectors' date=' the FDCPA specifically prohibits collectors from calling once they know you have a lawyer representing you.

...and as soon as you file pro se....

----------------------------------------------

As far as the requests to an OC to not call, I personally recommend, based upon my experiences, to do it. In my joustings with Citibank, my first request was "honored", their word. However, in another with BoA, the request was ignored, BoA calling as much as three times a day. In that case, I kept a record of the calls; and every three weeks or so, I would send another request to use USPS only. If and when there was any litigation, I thought to make the court aware of those requests and present the number of times I was called by BoA. Had that day arrived, I would have had well over 7 to 8 hundred calls from BoA compared to the "honor your request" from Citibank.

As to "being turned over to the legal department" any faster, that did not appear to occur. There seemed to be a certain timetable or frame that was employed by each bank, similar if not exact.

If there is a downside to requesting that OC's not call, I didn't discover it.

Edited by LearningasIgo
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  • 3 weeks later...

I sincerely apologize and thank you all that were nice and kind to help me on this subject, however the past few weeks have been a nightmare for me.

I have been tending to a semi-invalid 91 year friend all this year, then I came down with a bad cold 2 weeks ago, my car broke down on me twice (since I made my original posting) and I did not have the money to get it fixed right away both times, and I have been very down and glum over my financial situation. Yet at least I had enough money yesterday to get my car fixed, so now I have a car again.

Based on what you have shared (Thomassl, Nobk4me, Methuss, Prosay, LearningasIgo, Jq26, and Denita) it has been a big help. Thank you so very much for your help. Good luck to you all as well. :)

Edited by BrokeIn2011
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  • 1 month later...

Personally, there is no way I would do this pro se. First off I do not have the time, secondly, I am not savvy to the laws. My attorney charged me $400 plus the mandatory state fee of 299 to file so $700, I found her on Craig's List and she was great, its all they do. You do not get a choice whether you want to file 7 or 13 it is all based on income and the means test. I make over $60K a year and did not qulaify for the 7. However, had I filed right after getting divorced I would have qualified, instead I waited almost 3 years and after I re-married. Big mistake. So now forced into 13, had I known this I wouldn't have filed period. Why the hell do I want to pay it back when I could have done a 7? So now I get to spend the next 5 years paying back all of my creditors using all of my disposible income. This was no fault of my own. My house took a $60K hit and I was forced to short sale due to the crap economy and housing market. Oh and second mortgaes do not have to short sale, hence the deficiency, and they refused to settle. Then my lovely ex husband, unbeknownest to me, maxxed all of our credit cards in a 3 week period outfitting he and his new girlfriend in a home and buying horses and other crap. So there we were, over 100K in debt. I live in a community property state. He had never been like that so had no reason he would ever do that to me. So after all of that....

1) Use an attorney there are cheap ones out there that are just fine and will take payments

2). Think twice before doing a 13. If you can't file 7 you are screwed. Plus takes 5 years to discharge.

3) Find a way to hide money if you do. :0)

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Re: 7/13- you do have a choice. A good attorney should take you through the entire means test, which backs out so many living costs & secured debt that you can make a lot of money and qualify for a Chapter 7. I know two couples that sailed through a joint Chapter 7 and made upwards of $130,000/yr with no break in their income. Its called student loans, daycare, mortgages, car loans, etc. As mechanical as the means test can be, the calculation is what it is. In my opinion, it is the rare person that needs a chapter 7 bankruptcy that is prevented from filing a Chapter 7 because of the means test. Above the applicable state median income filers get through Chapter 7 quite often. But, in my opinion, the attorneys are lazy and do not want to sift through the mountains of paperwork required to properly fill out the "long version" of the means test. And when you add in the contentious attorney liability provisions, many attorneys just don't want to take Chapter 7 cases where debtors have incomes that disqualify them from the automatic means testing exemption given to debtors with incomes below the state median.

Chapter 13 is a benefit because you can save your home and can cramdown on creditors. If you don't have unprotected equity in any assets and you aren't behind on your home payments, then seek a Chapter 7.

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  • 1 month later...

Thank you Efish.

I apologize in my long delay in getting back to you, but I have been dealing with a lot of family and personal business/problems for almost the past two months (most of it centered on my financial problems). So now that things are settling back down once again, I am trying to catch back up on all of the internet forums I belong to. Yet during the time that I have been away from this forum, my family has been trying to help me financially to get out of some of my financial messes I got myself into. Yet I know that my family can not help me with all of my financial problems, but they were able to give me at least some financial help to make a big difference. So now I am hoping that I do not have to go BK.

Efish, I wish you well, as it seems that you are really going through some rough times. Yet I hope and pray that all turns out well for you. As I now know first hand, that it is very tough and frightful to endure a financial nightmare as you have described, now that I am dealing with my own financial nightmares (which I have been dealing with for just over a full year now). So now I just hope that things will get better in the future for you and me both.

Thank you Jq26. I appreciate your help, input, and advice. Thanks so very, very much.

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