Legal Question in Bankruptcy in New Jersey

My husband & I filed chapter 13 in 2009. Our payments were based on me receiving Unemployment (which was a temporary income). I repeatedly told our attorney this and indicated once the unemployment stopped, we would not be able to make the payments. We voluntarily surrendered our home in order to keep our vehicles as we would need them for future employment. My husband then was laid off in early 2010 and was also collecting unemployment. My U/C stopped (which was double his amount). We have missed many payments now and additionally, my husband wrecked his vehicle which has been paid off by the insurance company. He is again employed while I have now been listed as 100% disabled and receiving SSI benefits. We were homeless for 6 months and are living in a friends' home while they are trying to sell it. We pay all of my SSI for home rental. We still cannot make the trustee payments and our lawyer has advised us not to show up for our court hearing tomorrow if we cannot make the payments. He also wants and additional $1250 to file chapter 7 after he charged $3500 for the chapter 13. Do we show up to court unable to pay anything or what should we do? Thank you. (we are still trying to hold onto the only vehicle we have so my husband does not lose his job and has to go back on unemployment). My husband has a medical condition requiring $1400 a month in prescription meds that his company does not cover and he barely makes that per month.


Asked on 1/25/12, 3:50 am

1 Answer from Attorneys
Jeffrey Walters Law Offices of Jeffrey S. Walters, LLC

What was the situation that warranted you originally filing a Chapter 13 as opposed to a Chapter 7? And what is the situation currently that makes you wish to continue with the Chapter 13? If you simply want to pursue a Chapter 7 at this point in order to discharge your unsecured debts, you do not need to "file" a Chapter 7. Rather, you can convert to a Chapter 7. This means that you would not need to retake the credit counseling course or prepare a new bankruptcy petition. You also would not need to pay a new court filing fee. You could simply convert to a Chapter 7 which entails a $25 filing fee. You would then simply need to attend a new 341 meeting (since the one you previously attended was for a Chapter 13, not 7). Therefore, the legal fee to convert is typically much less than filing a Chapter 7 from scratch, because you do not need to start from scratch. Most of the additional work entails attending the new 341 meeting. Your current attorney is entitled to a fee for the additional work to convert, since he apparently did conclude all work for the Chapter 13 for which he was paid. Was the $1,250 for a conversion, or for a Chapter 7 from scratch? A conversion should be considered, at an appropriately reduced fee since much of the work is already done. There may be reasons why a new filing is preferable to a conversion. I would be glad to evaluate this for you if you wish to call me.

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Answered on 1/25/12, 1:47 pm


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