Reader Questions

Should I file bankruptcy or hire a financial advisor?

Consumer Complaint Submission
Written by Consumer

I am not feeling very confident about filing bankruptcy. Since we are both back to work, the plan it has gone from ch 7 to ch 13 (way more expensive) and the attorney’s plan is:

“proposing a plan payment of $700/month (10% dividend to unsecureds) and you guys putting the excess of your disposable income over that amount into a bank account that you pay to the trustee at the end of each year. One advantage of this approach is that extraordinary expenses will be funded. The biggest disadvantage is that you’ll probably be tempted to spend on things you shouldn’t.

I don’t know if the trustee will go along with this, but it’s the only thing I can think of that’s likely to work for you guys.”

We have 2 liens on the house which is going to cost even more in fees, I’m thinking I could negotiate a better deal directly with the creditors than this ‘plan’. Help, I am so confused.


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This is information that was submitted by a third party and not generated by or Steve Rhode.


  • Rosi,

    There is a good amount of detail missing from the background info you gave on your issues.
    If you can answer the following questions in a comment reply you will get some helpful feedback.

    Is the 13 plan going to reduce your unsecured debts to 10% of the balances?
    It is unlikely in the extreme that you will be able to negotiate better than that.

    In order to get a better feel for your situation and what options and timelines you are up against outside of the bankruptcy:
    Who are the debts owed to?
    What are the amounts?
    How long have the accounts remained unpaid?
    What state doyou live in?
    Who place the liens on the home?
    When were you sued (how old are the judgments)?
    What are the judgment amounts?

    • The story. We were living in way too much cc debt, my husband travelled for work and I quit my job to travel with him for 2 years.  We had some savings, and had been paying more than the minimum on credit cards, actually we paid 800 a week to cc at that time, which is what he was getting per diem. We used the cards to pay hotel, etc, then used per diem to pay them. There were 5 major cards.

      Then he got laid off Jan 2010.

      We stopped paying all but the mortgage and car in January 2010, thinking
      we’d pick it up when work resumed. That didn’t happen, and
      unemployment, when it finally kicked in, with our savings, barely
      covered our basic food/heat and these costs.

      We talked about filing July 2010, but because of payments to a family member were advised to wait a year or they could be sued for preferential payment. Also we did not want to walk away from the house.

      My husband went back to work for 2 months (April to June 2011) for the same company, then he got laid off again, resulting in no income for a couple months, then 200 less per week in unemployment when that was straightened out. We had no more savings, and we stopped paying the mortgage in June 2011 so we are now behind 11k on our mortgage.

      August 2011 talked to same attorney, was told to apply for food stamps and medicaid, and call local legal aid. We didn’t qualify for any of the programs.

      Unemployment started up in October. Thank God for family. We paid/made almost nothing this past summer. We also contacted the attorney and gave him retainer for Ch7. Were advised we probably wouldn’t have any problems. They way I understood it, if we could get back to work it would show we could make our mortgage/car payments if we could get out from under everything else, and start over.

      Dec 30 we were told that if want to keep the house, we’d have to file Ch13.

      My husband went back to work again Jan 1 2012, and this job ends in a couple weeks, not sure if they have more work for him or not. Can’t get private insurance because he qualifies on 3/1/11, If they have work…  We did finally make a mortgage payment, in January, they cashed it and then sent us an intent to foreclose document. We live in MA.

      The debts (totalling approx 60k) are mostly credit card companies Unpaid for over a year.  Two of the credit cards have liens on our home, this is our fault as we didn’t go to the court dates. Depression and outright denial made it easier. The current judgements are May 2011 for 17,500 (credit card) with a date in April 2012 for a civil review of nonpayment and Sept 2010 for 10,059 (credit card) There are other amounts smaller, less than 2k each and several that are old (2004 and earlier) that were either settled or past SOL, even though they keep pretending they’re current. I’m amazed at what collectors try! I had gone through all our old debts in 2004, made settlements and paid them off. The car will be paid off in March, it’s actually mostly late fees owed, so we are proud owners of 2 cars with over 160k miles each.

      The pre filing counseling was done Jan 16, 2011. I guess I’m just not asking the right questions, If husband keeps working, this plan would have us pay $700 month to trustee, and put about 15k in the bank yearly for I don’t know how many years, to be paid to the trustee, “if they’ll go for it”

       I’m so lost, the budget I initially gave attorney was with little or no income, so now after him working 1 month it looks like we have 2k per month in disposable income! I’m re-doing that budget, but don’t know what constitutes “reasonable’ as we’ve obviously been living frugally, there are no deductions for insurance because of the waiting period, and our car payments will be over.

       In the meantime I’ve started a small business in direct sales with a very small ($50) investment in which I see a real future building as I’ve invested tons of time and education and have extreme support from my upline, and I love doing it, something I can’t really say for any other jobs I’ve had. I have been spending money on marketing/advertising/samples in the past month.

      I’m 55, and my husband is 49. We have retirement accounts, current 401k $13k, his IRA from a former employer $10k, and 2 Roth IRAs with 12k total.

      • Thanks Rosi.

        The details you gave reminded me of a thread I think you started on this web site in early January. I found that thread and read through it as well.

        If you have not already connected with a different attorney or two for a second opinion, please do.

        The details you provide suggest you should qualify for chapter 7 unless I am just missing something.

        I do not know the following attorney in MA, but I do know Andy Faria in MA who recommended another reader contact this attorney, and I trust Andy’s judgement.

        Here is what Andy wrote to another reader on a different thread:
        “Try Attny Tom Benner from the Law Offices of Smellof & Benner. They
        have offices throughout the state and consultattions are always free.
        I’m not sure if he would be able to work pro-bono, but I do know he is
        always flexible and understanding.
        He’s a great guy and I’m sure you will agree if you wind up meeting with him. His direct # 781-706-3228. 
        Good luck,

        You can’t beat the price of that consult and a second opinion will not hurt anything.

        •  Hi Michael,
          I did speak with this attorney, what a difference in communication skills! He did confirm that it’s taken a long time, was much more people oriented, and didn’t understand those numbers any more than I did.  My husband wants to try to work with the one we’ve paid $1800, of course he’s not working on it, he’s out of town working, and I’m ready to step in front of a bus. But that’s not what I really wanted to say, I wanted to say thank you, and how do I fire this first guy? Because my life is worth more than 3 grand, and I know hubby agrees with me on that. I’ll also look on the board, just wanted to know if anyone else has done this and how. I was going to ask him for a final bill, the agreement says ‘for hours spent” if we decide to disengage him for this matter. Also, can I put him on the list afterward? That would be kinda sweet….

          • Glad to hear it was a good experience.
            From what you have shared, I don’t have the impression that you have actually filed documents with the court. If that is the case, letting your attorney go is as simple as letting him know.

            Best of success to you and the hubby moving forward!

      • My husband and I filed bankruptcy a few years ago and I would not recommend it to anyone except as a last resort.  We needed an appliance right after we filed and couldn’t get one/no credit.  We had to borrow money from a family member. Go with the financial advisor and you might be able to save your credit score.

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