QUESTION
Hired a lawyer 3 years ago to file bankruptcy. It still has not been filed. A foreclosed home was involved. What do we do about incurred interest?
Asked on Feb 15th, 2012 on Bankruptcy - Missouri
More details to this question:
We hired a bankruptcy lawyer 3 years ago. We had moved to a new state and lost our home to foreclosure also. We moved for my job promotion. He says that bankruptcy is based on gross income including overtime. Is this fact? We relocated to better our situation. He told us not to make any more payments. We have incurred 3 years of interest on credit cards because he has not filed either chapter 7 which he says we make to much money for or chapter 11 0r 13 where we pay back the money. What can we do about this? My husband and I have both been served papers by the sheriff a few times each. The interest that has incurred is well over $20,000. Do we have to pay this because of his negligence?
3 ANSWERS
William/J Joanis
If you will eventually file for bankruptcy, you should not care about the interest that is accruing. It will be included in the discharge you receive. Your income may exceed the "means test" which includes all of your income. Your lawyer seems to be doing everything right. A lesser lawyer would have put you into a chapter 13 and had you turning over money each month for the next 3 to 5 years to your creditors.
Answered on Mar 02nd, 2012 at 12:55 PM
3 Awards
In order to be eligible to file a Chapter 7 bankruptcy, you have to meet certain income requirements. I suggest consulting with a bankruptcy attorney locally to see what your options are at this point. If you have some savings, you may be able to settle the debt for less than the amount owed. If you are currently being sued, you should consult with a lawyer. If you do not appear for the hearing there will be a default judgment against you and you could end up with a wage garnishment.
This is intended as general advice only and does not create an attorney client relationship. You should meet with a qualified attorney in person to discuss the details of your specific situation.
Answered on Mar 01st, 2012 at 12:15 PM
Bankruptcy Attorney serving Burbank, CA
Partner at
Law Office of Mark J. Markus
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3 Awards
I'm not completely sure I understand your questions. Bankruptcy eligibility is based on a number of factors, one of which is the gross income received in the 6 calendar months prior to filing. If that leaves you over the median income for your location and household size, then you need to undergo a "means test" which uses IRS allowed expenses and other deductions from income to arrive at another number which may or may not show you eligible for a Chapter 7 case. There are other factors as well. It's very complicated.
Did you hire the attorney to file a Chapter 7 for you, or a Chapter 11, or Chapter 13? It's not clear from your facts. They are all different and require different retainers. Is your attorney merely waiting for your income to drop so you can file a Chapter 7, or have you instructed him to go ahead and file a Chapter 13 (or 11)? Sounds to me like you're having a communications problem with your attorney, and you may want to find another.
As for the interest accrual, I'm not sure what the issue is there. If you file a bankruptcy, that should be dealt with in your bankruptcy case. If you don't file bankruptcy, it would have accrued anyway.
Mark J. Markus, Attorney at Law
Handling exclusively bankruptcy law cases in California since 1991.
http://www.bklaw.com/
bankruptcy blog: http://www.bklaw.com/bankruptcy-blog/
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Answered on Feb 15th, 2012 at 5:29 PM