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In a Chapter 13, the Attorney’s Fee Can be Placed into the Plan of Reorganization

The Chapter 13 attorney’s fee can be placed into the plan of re-organization.  We become one of your creditors, so, when you make that monthly plan payment, the trustee is going to turn around and pay our fee. That allows for very little out of pocket cost to retain an attorney on a Chapter 13.  Our retainer fee is $500, which is applied to the cost of the bankruptcy, the filing fee, the credit report and the credit counseling classes.  The attorney fees are paid through the plan payment. We know the person can afford it because we see their income and their expenses,  and when we write the plan.

The Importance Of Retaining An Attorney To Handle A Bankruptcy

Why is it so important to secure an attorney when it comes to buy for Chapter 13 bankruptcy?

The important duties of an attorney in Chapter 13 bankruptcy are to deal with the creditors, and deal with the trustee.  Really, the only thing the client should have to do in a Chapter 13 is make that bankruptcy plan payment and/or the mortgage payment.  The legal stuff should be left up to the attorney.  If somebody doesn’t have an attorney, then they become their own attorney. At that point, the court and the law presume that they have made conscious choices because they know and understand the law, and also that they know what they are doing.  But in many cases, they don’t and the resulting errors can be costly. it is not only the law as it is written on paper, but how it is executed that are important. An experienced attorney can avoid pitfalls that he has seen, and prevent them from becoming larger problems. Remember the old saying; “he who serves as his own attorney has a fool for a client.”

If There is Some Level of Fraud in a Plan Payment, the Judge can Bar an Individual from Re-filing

You may lose some other benefits of the plan, for instance, the low interest rate on the car or paying back the tax liability, The tax liability will still be there after you get the discharge in the chapter 7 but it will take care of your unsecured debt and you will get some benefit from having gotten a discharge in bankruptcy. I mean most people don’t do multiple Chapter 13 with discharges because, they have solved their financial problem.  But if somebody keeps getting a case dismissed and they re-file,  there may be some level of fraud involved. The judge can bar you from re-filing if he feels that there is fraudulent activity going on.

Chapter 13 Bankruptcy is Difficult Under Ideal Circumstances to Discharge

That happens more often than you would think.  There are a lot of low profilers who frankly got out of the Chapter 13 for whatever reason.  Chapter 13 is very difficult under the ideal circumstances to make it all the way through to discharge, because your financial situation basically has to remain stable for five years.  And some times, that just doesn’t happen, as people lose jobs and credentials go up, I mean gas is always going up, isn’t it?  You know things just happen that people can’t control.  But there is a way to convert the case from a Chapter 13 to Chapter 7, if you find that you just cannot make the plan payment,  (I actually had a conversation with a client today about this) then you can convert the Chapter 13 to Chapter 7 to get a discharge but it will be a Chapter 7 discharge.