Please share your experiences with bankruptcy

I have to say that the comments by this debtor indicate that he filed not because his DMP didn’t work or he did not have the ability to pay, but because he simply wanted to spite the creditor. It appears that he could have cleared this debt in a year, and pay others in the plan, and just to get the lawyer back decided to file a Chapter 13. As for his desire to write letters, the lawyers and creditors will simply move to the next file and not spend time worry about his filing. Meanwhile, he has 5 years in bankruptcy to “show them.” Of course, there are probably more facts not listed, but this seems to be the story the person wants to convey.

Even though I live in another state I find your blog interesting and user-friendly to read.

You asked for Chapter 13 experiences. Here is ours, and I will try to post to you the condensed version.

Talked with attorney mid-November 2005. Brought the laundry list of items he needed. Credit counseling finished, proof faxed and mailed to attorney and us.

December lingered. No filing. Attorney busy, holidays, excuses excuses. (First clue we should have changed attorneys)

January 2006: More non-returned phone calls. More excuses. (Yes, check for filing fee, etc was cashed in November. Second clue..)

February 1 finally filed. February 15th first check to Trustee mailed. $402 per month “disposable” income paid into plan.

March 2006: First meeting of creditors. Attorney didn’t show. (Hit me with a baseball bat..third clue) Judge says: “It appears there are creditors here, perhaps you want your attorney here???” Thankfully the meeting is re-scheduled. “Apology” call from attorney later in the day.

April 2006: Second meeting of creditors. Attorney shows. Objection heard already from Judge about car payment amount. Attorney goofed up. Payment amount was for both cars, not a single “extravagant” car.

May 2006: Objection objection objection. One income (mine) is comission only (real estate). Even though I haven’t received a check in 7 months they still want “average” over 2005 entirely. No argument from attorney. Amount “disposable” income increased to $652 over plan.

End of May 2006: Amount again increased , now at $888 per month. Called attorney, clearly and concisely showed him that money now left out of husbands check are $409 less than the IRS standards. We are now eating off-brand macaroni and cheese, and can only drive one car because of gas expenses. Also, asked attorney for original packet given to him in November (titles to vehicles, divorce documents, deed to home, etc. ) Was told they were returned and he doesn’t have them. 2nd call to attorney regarding missing documents. 2nd reply of “I already gave them to you!!!”

June 15, 2006: Plan confirmed. (Notified by Trustee) Still can’t drive 2nd car, freezer empty, and no documents. However, our attorney is asking to be paid $174 for “clerical” work regarding 2 phone calls about documents.

Have been referred to new attorney. Will consult with her next week about plan modification, and anything else that should come up in the future.

Here is my experience:
We filed 39 months ago to save our house, payment was supposed to be $575/month. Our lawyer told us to include everything we had in the plan including our truck payments and a few medical bills.We started making payments, but later was told we would have to pay $1000/month on top of our $1200 mortgage payment. We couldn’t afford it so we left the house anyway. We tried going back to the bank to get our truck caught up and dump the chapter 13, but it was already too late, we would have to come up with months of payments. Our lawyer told us to quit paying our truck right away. Long story short, we are 39months into our 43 months and we are not better off, in fact we will end up paying more then if we had just left the house and paid everything ourselves. When we try to question our lawyers and the trustee about information on how soon this is going to be done we get conflicting reports and no one seems to know what is going on, not to mention there is money that they can’t seem to accout for and has not been sent to anybody. I would not recommend chapter 13 to anybody. Leave your house if you have to, our mortgage company sold it and did nothing to us, it doesn’t even show up on our credit report. If you are thinking about filing, please, please, please, DON’T!!!

Scott,

You obviously didn’t read my blog too closely. I did not file Chapter 13 to “spite” anyone. I filed it because my DMP didn’t tell me that lawyers for two creditors didn’t accept their proposal … leaving me wide open for litigation. One of them sent me a summons and intended to sue me unless I quadrupled my payment to him. This would have risen my cash outlay to a point where I couldn’t pay for food, rent, and a few other things. On top of that, the 2nd lawyer had sent me a threatening letter … and since he practiced law in the same city as the 1st lawyer, I suspected they might be “tag-teaming” me.

I had no problem paying off my debts through the DMP. However, paying off my debts while living under a bridge and eating dog food was out of the question. THAT is why I filed a Chapter 13 … to survive. FWIW, I could have filed a Chapter 7 (I qualified) but wanted to pay off my lawful debts … just as I had been doing under the DMP. However, I will admit to taking considerable pleasure in thwarting the 1st attorney from ruining me. This wasn’t spite. It was icing on the cake.

P.S. to my last post. I could have turned my blog posts into a full-length book. But, I wanted to keep the blog as brief and to the point as possible.

My debt management plan payments used up almost all of my disposable income. All in all, I made these monthly payments to creditors:

$375 to the DMP creditors
200 to the IRS
125 to an off-plan creditor
____
$700 total monthly payments to creditors

For me, that was “subsistence-level” … but I was willing to do that since I’d be totally debt-free in 3 years.

I can’t speak for all debt management plans, just mine. But it would be fair to say that most such plans either implicitly or explicitly counsel their debtor clients to believe they’re protected … that once plan payments are established and accepted by creditors, debtors no longer have to look over their shoulders and worry about process servers showing up at their doors.

My April 2006 DMP payment, the 9th monthly payment made in full and on time, included $78 for Capital One. But that DMP payment also paid off a smaller debt to Portfolio Recovery Services. Rather than “enjoy” the extra income, I chose to put their $78 payment toward Capital One – upping my Capital One payment to $156 effective with the May 2006 payment. It was AFTER this that I received the summons from Capital One’s attorney – demanding a $312 monthly payment to avoid litigation.

I did not immediately file Chapter 13. Instead, I retained an attorney to try to explain my situation to Capital One’s attorney … and remind them that my $156 payments would clear my Capital One debt in less than a year. It would have been financially impossible to rent my meager studio apartment, put food on my table, pay utilities, pay the DMP, IRS, and off-plan creditor if my Capital One payments rose to $312 monthly. So, my attorney told Capital One’s attorney that if $156 was not acceptable, bankruptcy was my only survivable option.

At that point, Capital One’s attorney backstepped and said he’d accept $156 payments … but offered my attorney no proof of this in writing. In addition, my attorney discovered something my DMP didn’t tell me … that neither Capital One’s attorney nor a 2nd attorney for another creditor (First Resolution Management) had “accepted” their DMP proposals. They’d accepted the money they were sent, sure enough, but had NOT accepted the proposals.

Because of this … and because the court appearance on the summons approached … and because the 2nd attorney had sent me a threatening letter … I told my attorney “thanks” and referred myself to another attorney who specialized in Chapter 13 bankruptcies (right around the same time my 10th DMP payment in May was sent).

My bankruptcy attorney counseled me this way. He told me that Capital One’s attorney was just “fishing” for an off-plan payment without agreeing in writing to anything. He also told me he knew the 2nd attorney and, upon seeing the threatening letter I received, told me I could expect a summons from him as well … probably asking for quadruple payments like Capital One’s attorney to avoid litigation.

In short, I had been doing the “right thing” for 10 months but even THAT was not enough. The only way to repay my debts while, at the same time, NOT have to look over my shoulder and worry about lawsuits, was to file Chapter 13. And so, that’s what I did … with all possible speed.

It has now been a year since my Confirmation Hearing – one year down, four to go. And I can tell you without any equivocation that I have NEVER regretted my decision to file Chapter 13.

On the first page of my blog, I mention a bankruptcy alternative available in Wisconsin. I firmly believe that such options should be made available in all states. Debtors willing to do the “right thing” and repay their lawful debts DESERVE protection from lawsuits during the process of repayment. Unfortunately, Chapter 13 is currently the only avenue open for protected repayment – outside of Wisconsin. Financially ruining debtors helps no one.

To make a long story short I lost my job & am in a divorce, I’ve had no income for 9 months. I have no assets at all, no health insurance and my ex took off with the meager funds we had in joint accounts. I owe about $50,000 in credit card debt and qualify for Chapter 7 but 2 attys said I would have to prove the ex took off with the funds & I’m not even legally divorced yet. I am thinking about writing to Chase and offering them a small settlement $.10 on the dollar (which I ‘d have to beg & borrow from friends and relatives) Am I really naive in thinking they’d rather have something than nothing? Is this a good or really dumb idea? All simlar experience or input welcome

Hello, me again. My Chapter 13 is proceeding well as I approach its 2nd anniversary (3 years to go). My IRS debt was cleared in January – and now it’s down to the nitty-gritty of the ordinary creditors. But last week, I heard some surprising news. My state bar association has filed a formal complaint against the attorney who represented Capital One – the same guy who asked me to quadruple my payments. The bar claims he violated professional ethics in an attempt to collect a particular debt. This filing was done with my state’s Supreme Court. And, if the Supreme Court finds him guilty, he loses his license to practice law.

Offhand, most people think disbarment is about as bad as it gets for an attorney. But this same attorney has more problems. Two separate lawsuits have been filed against him in Federal Court for violations of the Fair Debt Collection Practices Act. And according to an article in a local newspaper, all three actions (the Oregon action and the two Federal actions) appear to be valid and warranted … though the article didn’t discuss details. But, I suspect that if a state bar association goes after a member, they’ve got ample evidence to sustain their complaint.

In short, when all these trials are over, this attorney could lose his livelihood and end up in serious debt himself after addressing the monetary penalties of the Federal suits. So, it’s possible that he, himself, will have to deal with debt collectors in pursuit. What comes around goes around (grin). Couldn’t happen to a nicer guy.

The article also mentioned that the other attorney who threatened me also has his own Federal lawsuit to contend with. And it’s a beauty. He harassed, threatened, and sued a debtor. The problem? The debtor’s debt was beyond the state’s statute of limitation on collections. This is an FDCPA violation, too – big time.

Moral of all this? Not all debt collectors are willing to work within the confines of the law … even lawyers who collect debts. And unfortunately for most creditors, bankruptcy is the only “affordable” legal protection against these 300 pound gorillas.

Brief P.S. — No, my last sentence above is not a typo. I said unfortunately for most “creditors” for a reason. When I went into my debt management plan, I had 16 creditors. 14 of them accepted my DMP and left me alone. Only the attorneys for 2 of those creditors rocked the boat … even as they were receiving money from me like the other 14 creditors.

Debtors like me become involved in Debt Management Plans because we want to do the right thing. Stiffing a creditor is easy. Committing to a 3-5 year repayment plan takes fortitude. The last thing I wanted to do was “stiff” any of my creditors. But with my Chapter 13, I didn’t have much choice in the matter.

All fourteen “accepting” creditors will also have to receive partial repayments, just like the two “non-accepting” creditors. I am forbidden to “make up the difference” with any creditor while the Chapter 13 is in force. And once the plan completes, creditors are forced to close their accounts on me by law. So even if I wanted to make up the difference after discharge, creditors wouldn’t know where to apply the money I’d send their way.

If you read my blog, you noticed that initially, I wanted to send letters to each of the “accepting” creditors … letting them know how sorry I was that I had to file Chapter 13 … and letting them know that the ONLY reason I filed was to protect myself against lawyers whose clients wouldn’t accept the Debt Management Plan:

http://lessismore.atspace.com/CreditorLetter.pdf

My attorney advised me against sending the letter, however.

Bottom line? Lawyers like the 2 who hassled me upset the applecart of steady payments not only for their own clients but for 14 other clients as well. And frankly, after having these applecards upset, I’m surprised that creditor are still willing to retain them. This assumes they want their money paid back in a timely manner … and not interrupted and cutback by processes their lawyers can’t fight.

We filed Chapter 13 and are no better off then when we went into this. We filed to save our house. At the end of this we will owe almost the same arreages as when we entered the bankruptcy. Many mistakes have been made!
1) The wrong arreage amount (about $12,500 short) was filed by our mortgage company. (we think our lawyer put it in wrong, but says it was the mortgage company).
2) after 2 years we get a letter from Trustee saying we are being discharged and we should start making our mortgage payments. So we stop paying the trustee (as they said) now it counts against us because they say we are behind.
Well, that was with the wrong arreage amount and luckily I caught it after making the house payment for 3 months and then we weren’t discharged. We were put back into the plan for a lesser weekly amount.
3) then the Trustee/Lawyer realize we aren’t paying enough so they up it by $175 a week (from $450 up to $625 a WEEK!)
4) Then I realized the trustee wasn’t paying enough to the mortage company to cover our mortgage payment so we are accuring even more fees and interest, finally got that cleared up, no thanks to my lawyer.
5) The laywer sends us a letter 10 months before we are discharged and wants us to increase our weekly payment from $625 to $770 a week, YEAH RIGHT!?! Like we can afford that
We are already living on 30% of our gross income because of how much they are taking
6) we find out if we don’t increase it we will be released from our bankruptcy owing almost the same arreage as when we entered cause only 5% of the mortgage arreage has been paid at this point.
7) Trustee, Lawyer and everyone keeps saying “oh well”
This is the worst experience of our lives!! It has been the most costly (we have paid thousands to our lawyer trying to clear up all the mistakes, that never have ever been cleared up) paid the trustee fees and all the other fees, we paid our creditors and we are walking away from this still probably going to lose our house. I would advise anyone to never file bankruptcy, it is a scam! We are trying to pay extra when we can, we feel totally screwed by the system! I can’t even believe how useless our lawyer has been and yet he still charges us for every phone call even though every call ends with well call back in a month and we will see what I can find out. I am going to write a letter to the judge to tell him how this mess has caused us more stress than anything else in our lives! We can’t wait till this is over (just a few more months). Our mortgage company said we can file to have the arreage added to the end of our loan, but they can also refuse it after we file, so we will see. We wish we had some recourse in this mess

I filed a ch. 13 in 2006. Dumb move– it was just medical bills and 1 credit card, no house or car. I live in a 2 bdrm townhouse in nashville, but I’m looking for a 3 bdrm. I have tried 35 and counting apartment complexes–both good and not so good neighborhoods and NO ONE WILL TAKE ME BECAUSE I AM IN AN ACTIVE 13 UNTIL 2011.The fear is I will get behind on rent and add this to my 13. I have asked about a letter from the trustee and even a co-signer. Private owners are not an option because they want $900.00 + for rent and the same amount for deposit. Any suggestions, or should we just be glad we’re not homeless.

I filed a Chapter 13 on May 1st due to foreclosure. The judge dismissed the case because I didn’t file a debt counseling plan, so I hired an attorney on July 6, 2007 and filed again, well guess what the lender sold the house the same day I filed Chapter 13. I didn’t find this out until January, 2008, I informed my bankruptcy attorney and he had the nerve to asked me why do I want the house, never did file a motion didn’t do anything, so it gets worse my payments on the Chapter 13 increased from $4100 to $5000, now granted my take home pay is on $2800.00 a month and I told the attorney this and he included an additional $1000. to the trustee which I didn’t have in the first place, so to shorten the story my Chapter 13 was dismissed in May, 2008 for non payment, and I’m back to where I started in foreclosure.

I thought I was the only one who has had trouble with the Chapter 13 bankrucy. I didn’t have a house. If filed to save my vehicle which was stupid. I was alone, worked nights so I needed a car.
Well, I went with the first law firm I say in the yellow pages. They did get my car back for me. But it has been a nightmare. I just finished paying 46 months of payments when this attorney put an objection against me with the court. I have already paid the attorney more than what my car was worth and I am still being harassed by that law firm. They want me to pay them more money. It’s a business that preys on desperate people. I wouldn’t recommend bankrupcy to anyone. I got a discharge in October of 2007. Then in January they sent me a notice from the Trustee’s office stating that it was a clerical error and I still owe money which I paid and the last notice I got from the Trustee stated that I owed a little over sixteen hundered bucks which I paid then this those crooks from the law firm stated that I still owe money and I should contact them to discuss what my options are. I have had enough. Enough is enough. I am just going to go on with my life. I am tired and I just cannot deal with this anymore.

I am filing chapter 13 because the “means” test says I make to much money for a single person. I am okay with paying back the creditors, my problem is that the monthly payment is so unreasonable, do to a 401K loan I have. The courts do NOT count the loan as a loan payment. I have not gone to my 341 meeting yet, it was rescheduled due to a work obligation. Has any stopped paying before the 341 meeting? What are the consequences?

I wish I never started the chapter 13, wish I had just made deals with my creditors myself. Any GOOD advise for a Nevada resident….

The courts MUST allow 401K loan repayments if they meet the requirements of SS 1322(f)….BAPCPA 2005 specifically addressed this. Many attorneys and Trustees will try to force you into the Old Law rules.

I am now approaching the half-way point of my 5-year Chapter 13 plan. And I can honestly say that it was the best decision I’ve ever made. Frankly, I’m surprised at all the problems people say they’re having finding an apartment while under Chapter 13. My trustee has a list of apartment owners who will gladly rent to persons under Chapter 13 – if the trustee provides them with a letter indicating compliance with all requirements of the plan. In short, if you’ve made, say, a year of plan payments in full and on time, Chapter 13 need not be the kiss of death for renters – especially in our current tough economic times when rental vacancies have increased.

In addition, I’ve also been receiving a lot of mail from mortgage brokers who know I’m a Chapter 13 filer – eager to provide me with a home loan. At first, I thought these mailings were a bad joke – that they were encouraging me to violate the terms of my Chapter 13. But when I checked with my trustee’s office, they said it was perfectly legal as long as the trustee approved the loan package. Not that I’m going to move from my apartment into a home (grin). I want to keep things “stable” until my Chapter 13 is behind me. But assuming someone earned enough money to sustain mortgage payments after plan payments are made, it is a legal option many Chapter 13 filers are unaware of.

I’ve also been receiving a lot of mail from auto dealers – eager to sell me a new car even though they know I’m under Chapter 13. Again, my trustee says this is perfectly legal if the loan package is approved by his office.

In short, your credit score may be less than ideal … but it doesn’t mean you’re totally shut out of the credit market. I’ve personally just opted to stay COMPLETELY out of the credit market … for the LONG haul. But that’s just me. However, it’s nice to know I have “options” at my disposal.

Chapter 13 is a nightmare! Here’s what I did wrong… 1)got into debt in the first place… 2 )tried a debt management company that PROMISED I would pay only 40 cents on the dollar to the creditors over 3 years after paying $3000.00 up front; didn’t work because you DON’T pay the creditors, they say THEY will…they DON’T! 3) my debts continued to “rise” to incredible levels, so I worked tons of overtime at my measly $13.00 an hour job waiting on my debt management miracle… 4) my creditors sued me and won judgments against me (can’t blame them…but where’s my debt management people?!) 5) I decide to file bankruptcy, where I’m told that DUE TO MY INCOME, we must file a Chapter 13 because we failed the means test. 6) I told the lawyer that my income was ALL OVERTIME, 7 days a week, 12 hour shift stuff, and he said that INCOME OVER THE PRIOR 6 MONTHS ARE WHAT THEY BASE THE MEANS TEST ON! So, it LOOKS like I make $38,000.00 a year just by myself, and add my wife’s wages of $28,000.00, and we are paying $2,100.00 a month in Chapter 13. We rent an apartment now, and our disposable income has steadily decreased, but THE PAYMENT HAS NOT!
We are 2 and one half years into the five year plan. I no longer own any “good” car and had to find a “friend” to make under the table payments to get a decent running car, still work to exhaustion (my hair went from dark brown to grey; thank God for grecian formula!)and my wife and I have had some arguments about money. We always kiss and make up, because we love each other. But we both warn others not to file a chapter 13 bankruptcy if YOU are in similar circumstances.

ok here is my dilemma i am filing bankruptcy trying for a 7 but have been told it will have to be a 13—payments will be 931 a month—-i am retiring in 14 months and my wife who wanted to work until 66 may have too @ 62 8 months after i do. At that point can i tell them to kiss off?

I just noticed that it’s been almost 3 years (to the day) since I last posted here. In any case, my Chapter 13 was successfully discharged in July. I am now debt free and enjoying every minute of it.

One note to anyone who comes to this page after me. Most of the posts here regarding Chapter 13 are negative posts. My experience with Chapter 13 was exactly the opposite. It was the best decision I’ve ever made in my life. I only wish I’d made it 10 months sooner – instead of getting involved with that debt management plan.

In any case, I have a theory as to why most of the posts here are anti-Chapter-13. Simple logic, actually. Most people who have great experiences with Chapter 13 are out enjoying life (grin), not posting to blogs. In fact, the only reason I came here was because I did a Google search to see where else “lessismore” turned up. So, just as you won’t see “happy” customers lining up in front of a department store’s complaint department to offer “praise,” you won’t see too many happy Chapter 13 survivors post here.

From the day I filed, through the first meeting of creditors, through confirmation, and through the next 5 years, Chapter 13 was executed flawlessly. And it didn’t stop me from renting the apartment I now live in. Not all landlords and landladies are heartless people, especially in an economy where vacancy rates are high.

There’s only one negative thing about Chapter 13. But it’s kind of laughable, hehe. While under Chapter 13, I was not only protected from creditors. I was protected from junk mail credit-card offers (grin). Not so anymore. Less than a week after my discharge, the offers started to pour in. Now, I still get at least one offer a week. But, I won’t bite. From now on, it’s cash-n-carry (and debit cards).

Les, I’m glad Chapter 13 worked out for you. You are correct to point out that when it works, Chapter 13 is a powerful tool to reorganize and move forward.

Thank you, Jonathan. It still mystifies me when people try to drop a stigma on Chapter 13 filers – like they’re looking for a free ride out of debt. I think a sizable number of Chapter 13 filers (like myself) tried the other way first – through debt management, debt consolidation, or debt settlement plans. But as I found out, none of these plans can offer an ironclad guarantee that participants are free from lawsuits or other unfavorable actions. Only Chapter 13 can do this (or Chapter 128 in Wisconsin).

I went from being a big believer in “avoiding” bankruptcy to a big believer in utilizing it over a short space of time in 2006. And fortunately, I acted in time to avoid any leins, judgments, or garnishments. BTW, your header said you didn’t know where I was from. I’m an Oregon resident. And as an Oregon resident, I took special pleasure in learning that earlier this year, the Eugene attorney who forced me “into the arms” of a bankruptcy attorney has gotten his just due:

http://tinyurl.com/4ytznpd (a shortened URL address)

Regards,
LessIsMore