Does anyone know what to expect in Bankruptcy Ch 13 in the state of California ? I’m scared need advise”?

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my property has too much Equity, my attorney filed a Bankruptcy Chapter 7, & later on after filing for ch 7 our attorney realized that our equity is high so then he asked me & my husband 2 convert 2 Bankruptcy CH 13, this alarmed us, We are so comfused & scared more than ever, We are current with our primary Mortgage & 1st & 2nd Loan with our Bank that is tied up with our property, our balance is $ 129,000.00 & our Appraisal is for $ 295,000.00 & we are current with our Property Taxes/Homeowners Insurance. & we are current with our car payment & auto insurance. Our reason 2 File for Bankruptcy in the 1st place was because of personal credit card debts, we were told from our attorney that we do qualify for CH 7, Now our attorney tells us we do not qualify for ch 7 so we have to convert to CH 13, but he says our home is not secured with the $ 100,000.00 Home Exemption. our children are all Adults, even though they live with us, & we support them financially the court does not reconize my college children as our dependents under the law and because 2 of them file for thier own tax-return for years now so I only have one adult dependent age 18 who is still a full-time student in High School. another thing the lawyer said 2 us when after we signed the forms for ch 13, last week friday. that we qualify for a 100% Pay Back Plan. not reduced like they do for Consolidation, & not even once did the lawyer mention anything about consolidation so I am really comfused, I even asked an attorney at the Pro-Bono work shop @the Santa Ana Bankruptcy Court House 2 weeks ago & I asked if its safe to convert my case to a ch 13 to keep my property & personal property safe they said yes, & that I would have to pay what I could only afford a month from my husbands income for a 5 year plan”so I thought ok, this is good” But, when I saw my lawyer last week 2 sign 4 the convertion to a CH 13, she said my minimum payment would be around $ 1,000.00 a month 2 pay back my creditors & that’s the lowest payment the court would offer according to our attorney 2 start with & it will go higher in a couple of months “We can’t afford this” what should we do? this attorney is confusing us, my English is fluent but, the legal terminology is very confusing” if you have been through something like this before (or) if you know someone that had gone thru this in CA we would really appreciate any feedback you may offer, I tried 2 call my attorney again & she does not return calls I am scared for me & my family. Thanks 4 listening hope 2 hear from someone that would have knowledge to give us feedback that is true no matter how bad it ism we want to know what to expect & what we should do.
Mary:
Orange County, CA, USA

1 Comment
  1. Reply
    rpg
    April 29, 2011 at 10:53 pm

    There is something about your story that is troublesome. It sounds like either you have a very inexperienced bankruptcy attorney, or there is more to this than what you have disclosed in your question.

    Your adult children who are in college should file amended FAFSA forms and make appointments o talk with their college financial aid officers. Your Ch 13 may reduce the “expected family contribution” which may increase their eligibility for financial aid.

    Why will your Ch 13 payment increase in a couple of months? YOU (or your attorney, on your behalf) write your Ch 13 repayment plan and present it to the court for confirmation. The court does NOT write your Ch 13 repayment plan. YOU do. There are constraints, all of which must be met. But if you do not want a Plan that calls for an increase “in a couple of months” then do not submit a Plan that proposes this. In fact, that is fairly unusual. Most Ch 13 Plans call for equal payments over the life of the Plan. I do not know, and am having trouble guessing, why your attorney would write a Plan that proposes this. Most Ch 13 Plans do not.

    I also wonder whether your bankruptcy attorney is experienced enough to perform the Means Test correctly using Form 22c which is the Long Form of the Ch 13 Means Test. Many inexperiencd attorneys only use the short form of the means test, which can be a disadvantage to the debtor.

    Usually if you have a 100% repayment Plan, it is because you have equity that you could not protect in a Ch 7 with the available exemptions. That is why you are converting your Ch 7 to a Ch 13 — because your equity in the home exceeds the available $ 100,000 exemption. It is somehow troublesome that your attorney did not realize this before filing the Ch 7, unless the appraisal was done after the Ch 7 was filed or unless you tried claiming your adult children as dependents and that was disallowed after you filed. Was the appraisal done recently or are you using an old appraisal figure? If it is old, you might want to get a newer appraisal since property values have dropped in many areas. Your appraisal would need to come in under about $ 235,000 in order for you not to have an excess equity issue.

    If I were you, I would make an appointment with a second bankruptcy attorney for a complete review of the case and a second opinion. You will need to pay for this, but it might be worth while to get a second, experienced, pair of legal eyes taking a detailed look at the case.

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