Interviewer: When a client meets with you, what are their initial needs? What do they tell you? What’s like the most common thing that they’re going to ask you?
Court Koehler: Usually, they will tell me their situation. Generally it’s going to be that they’ve lost their job or they’ve had a medical problem and they’ve been unable to pay and they’re behind their mortgage. They’ll tell me their situation right away. From there, I can kind of tell where we’re headed, whether it’s going to be Chapter 7 or Chapter 13, or whether it’s something that you take care of with direct negotiations with the creditor. That’s the first thing that happens.
Then their questions are usually whether the trustee is going to take things and sell them, whether they’re going to lose what they’re going to lose – which is usually nothing. It’s almost always nothing. They’ll be worried about losing assets: TVs, cars, and their house, whatever that is. Lots of people are concerned with how it’s going to affect their credit as well, so how you to report it on credit reports and whether they’re going to be able to repair their credit, and whether they’re going to be able to get loans for cars and mortgages in the future.
Importance of Retaining a Good Attorney
Interviewer: Why is it important for someone to secure a good attorney for Chapter 13 bankruptcy?
Court Koehler: Well, like I said earlier, a good attorney can help you decide whether or not you actually need to file Chapter 13 bankruptcy. The danger with attorneys is Chapter 13 bankruptcies pay better, and so sometimes there’s the temptation for an attorney to push someone into a Chapter 13 bankruptcy when they really would be better suited by a Chapter 7 bankruptcy or not filing bankruptcy at all. First of all, you want a good attorney that you trust, that’s honest, and that cares about your situation so that you don’t get the wool pulled over your eyes that way.
Second of all, you need a good attorney that knows the laws, that understands the conventions in the area, that has handled cases with the trustee, and knows what to expect as far as whether they’re going to object to a plan or what sorts of exemptions and what sort of income problems there might be, so that they can take care of that plan ahead of time and get it all confirmed quickly so that you can begin paying back and getting on your way with your bankruptcy. If you have an attorney that’s less experienced or if you try to do it yourself, it’s very easy to muck something up and end up having to pay more in your Chapter 13 plan than you should be or for a longer period, or not being able to have it confirmed and having to go to court several times. All kinds of things can happen in a Chapter 13 case that really you need a good attorney to make things go smoothly.
Attorney Compensation & Other Fees
Interviewer: We’ve kind of reached the end of our interview here. In regard to Chapter 13, was there anything that I missed that you want to go ahead and talk about or anything that you want to review?
Court Koehler: Yeah. One thing we haven’t talked about yet is the way the fees work. With a Chapter 13 bankruptcy, it’s really helpful to people sometimes because you can actually pay your attorney’s fees back in their plan, whereas at a Chapter 7, because of differences in the law, I have to have all of my fees upfront before you file for a Chapter 7. In Chapter 13, there’s usually a pretty small down payment and the filing fee and the rest of my fee is taken care of as part of the payment plans.
When I do a Chapter 13, I take a down payment upfront, but the rest of my fee actually is paid to me by the trustee because you’ll be sending your checks to the trustee for the Chapter 13 plan each month. Then I get a disbursement from that Chapter 13 as if I was your mortgage holder or creditor that the trustee was paying money to. That really helps people out a lot of times, especially if you’re being slow to contact a bankruptcy attorney because you don’t feel like you have the money to file bankruptcy. A lot of times we can work with you and it really isn’t as expensive as you think it is. You may not need to come up with nearly as much money as you think you do initially.
Interviewer: Are there other fees that someone should have to pay aside from the debts and all of that, but as far as for Chapter 13 alone?
Court Koehler: Yeah. Aside from the actual debt, you’ve got the filing fee – that’s $284 – with the court. There are a couple of other miscellaneous fees that don’t add up to too much, but there are some credit counseling classes that are required by statute that you have to take. Then I require a certain credit report from a credit report agency that I trust and so I get those and there’s a little bit of a charge for that. Then there are trustee fees. They take a percentage for distributing everything, the work that they do, sending your money to the creditors, and looking over your petition and all that stuff. They have a fee, and then there’s my fee.
Interviewer: Court, do you have any particular cases that you can share for someone to relate to –a particular case that you may have worked on in recent days in which the person had to file for Chapter 13?
Court Koehler: Yeah. I’ve got several Chapter 13s going right now. They all kind of have similar backstories. They are situations where a mortgage payment has gone too high because of unadjustable rates due to the housing crisis. They’ve gotten behind on their mortgage payments and they just want to keep their house. That’s really all they want to do. In each of those cases, we’ve been able to file a Chapter 13 bankruptcy for those people. They are paying a couple hundred bucks a month. Each one is a little bit different, but it ranges anywhere from $100 a month to $300 or $400 a month, depending on their debts and the situation of their income.
All of them are able to afford their payments and they get to stay in their house. They’re making their payments. Their claims have been confirmed and they’re well on their way to getting back on their feet financially. It’s really rewarding work for me. I just have, with Chapter 13 bankruptcy and even Chapter 7 bankruptcy, a lot of stories of people that have been able to get back on their feet that I’ve been able to help out. It’s really rewarding work.