When filing for Chapter 13 bankruptcy, you should always work with a skilled lawyer to minimize issues. However, because you are working to eliminate your debts with a payment plan, you may wonder, “When are attorney fees received in Chapter 13 bankruptcy?” While you may need to pay a certain amount upfront, the rest of your legal costs are generally bundled into your ongoing plan payments.
Below, a qualified Chapter 13 bankruptcy lawyer in Seattle, WA, from Symmes Law Group discusses how this process works and what it may cost.
What Does a Bankruptcy Attorney Charge for Handling My Chapter 13 Case in Seattle?
Every law firm will have different levels of service and fees for guiding you through a bankruptcy filing. The bankruptcy court must approve your attorney’s fees and their inclusion in your payment program. To pay your lawyer, you usually pay a portion when you get started, and the rest once the court approves your petition.
At Symmes Law Group, here is how much it costs to file for Chapter 13 bankruptcy:
- Initial fee: $2,500
- Credit counseling fee: $25-50
- Court filing fee: $313
- Credit reports: $37
- Remaining fees: $2,500
Your total of attorney fees will be $5,000, and you will also need to cover court and credit report fees. Generally, you must pay the initial fee and court costs, and then we can roll the remainder into your payment plan. This allows you to get the legal assistance you need when your primary issue is insufficient funding to meet your liabilities. These fees covers legal services through confirmation of your plan. If additional modifications or services are requested a fee application may be filed in your case to receive payment at a later date.
How Chapter 13 Bankruptcy Works
Consumers with overwhelming debt and a need for a structured way to pay it off can file for Chapter 13 bankruptcy in Washington State. This program gives you about 3 to 5 years to pay for debt on credit cards, medical expenses, and property mortgages. Filing for bankruptcy creates an automatic stay during which you don’t have to pay creditors directly, and they can’t pursue you.
The bankruptcy court reorganizes your debt with monthly payments, which you make to the assigned trustee. The trustee then distributes funds to your creditors until all debts are paid. Once you complete the payment period, the court discharges your debts, which allows you to start over with rebuilding your credit.
Some debts are non-dischargeable, including child support payments, student loans, court fees, and tax fines. They can still be part of your payment program, but you might have to make alternative arrangements. Your bankruptcy attorney can help you determine the right approach for each type of debt you owe.
Chapter 13 Bankruptcy Compared to Chapter 7 Bankruptcy
Chapter 13 bankruptcy allows you to keep all your assets while you make payments over time. If you file for Chapter 7 bankruptcy, you retain only non-exempt assets, such as your home and a vehicle, while a trustee sells everything else and pays your creditors. Chapter 7 is much faster, often complete in as little as 90 days, while Chapter 13 may last as long as 5 years.
When you first speak with your attorney, they can help you understand the bankruptcy roadmap and the Chapter 7 means test for assessing your options. Your lawyer may recommend filing for Chapter 7 immediately, or you may find that you need to change to Chapter 7 from a Chapter 13 plan. Doing so may result in additional court and attorney fees to process the changes.
Unless you have a very limited ability to make monthly payments you will likely qualify for a Chapter 13 bankruptcy filing. However, if you do not meet the debt limits to file for Chapter 13 bankruptcy or you have filed a Chapter 7 bankruptcy in the previous 4 years, you cannot pursue this route.
The Chapter 13 Bankruptcy Process
Filing for Chapter 13 bankruptcy is a complicated process, and simply petitioning the court is no guarantee that it will approve your case. You must demonstrate that you have made a good-faith effort to pay your debts and that you have the income and ability to meet the demands of a structured plan.
Here is what to expect after discussing your case with your attorney at Symmes Law Group:
- You complete a questionnaire to assess which form of bankruptcy is best for you.
- You supply the previous 2 years of tax returns and 6 months of pay stubs.
- You complete a credit counseling case from an approved provider before filing.
- Your attorney prepares your bankruptcy court petition, which you review and sign.
- Your lawyer files your petition in the Western District of Washington Bankruptcy Court and pays the associated fees.
- The court assigns your case number and court date within 45 days of filing.
- At the court date, you attend the 341(a) meeting of creditors to answer questions about your financial history.
- The court assigns a trustee to your case to oversee your payments and distributions to creditors.
- Once you remain current on payments, the bankruptcy judge confirms your plan.
Income Could Impact Timelines for the Process
Bankruptcy plans typically last either 3 or 5 years, depending on your gross household income for the 6 months preceding your filing. Those below the median income in Washington State must file a 3-year plan, while those above the median must file a 5-year plan. When you file your petition, creditors can no longer continue with any garnishments, foreclosures, or collection activities until your debt is paid.
How a Chapter 13 Payment Plan Prioritizes Payments
Once the court approves your Chapter 13 bankruptcy plan, you will make payments to your assigned trustee. The trustee pays each recipient according to their priority, in this general order:
- Bankruptcy trustee expenses
- Bankruptcy attorney fees
- Administrative and court costs for your bankruptcy case
- Government agency debts, such as unpaid child support and tax debts
- Creditors with secured debts, such as mortgages and car loans
- Creditors with unsecured debts, such as medical bills, unpaid rent, and credit cards
Your monthly payment amount depends on your gross household income, minus necessary expenses and deductions from your paycheck.
Converting a Chapter 13 Bankruptcy to a Chapter 7 Bankruptcy
If you are unable to make your monthly payments during your Chapter 13 repayment program, your attorney may recommend converting to Chapter 7 instead. When you convert Chapter 13 to Chapter 7, several things happen:
- You stop making payments to your Chapter 13 bankruptcy trustee.
- Your case is reassigned to a Chapter 7 bankruptcy trustee.
- You must attend a new 341(a) meeting with creditors to answer questions about your financial affairs.
- You file new forms and present proof of your inability to meet the monthly payments.
- The bankruptcy court seizes your non-exempt assets and sells them to pay your creditors.
- Your attorney may charge additional fees to assist you during this process.
While you can choose to convert to Chapter 7, there are instances where the bankruptcy court may force you to do so. Your trustee monitors your case on a monthly basis to see if you are incurring additional debt after filing for bankruptcy. If you fall behind on payments or do not appear to be following the bankruptcy requirements, the court may require conversion to satisfy your debts.
What Assets Does the Court Consider as Non-Exempt?
If you file for Chapter 7 bankruptcy from the start or must convert your Chapter 13 program later, you will usually retain certain protected assets. Usually, you can keep your car during bankruptcy so you can go to work and fulfill basic living demands, and have a home. If you have other real estate or vehicles, the court typically will seize these and sell them.
Other bankruptcy exemptions include your personal property, such as clothing, a computer, and a cell phone. You can keep household goods and appliances. It’s important to understand that the bankruptcy court may make other rulings on what you can keep, depending on the details of your case and how closely you adhere to your bankruptcy agreement.
Why You Should Meet With and Hire a Chapter 13 Bankruptcy Lawyer
While it is possible to file Chapter 13 bankruptcy without an attorney, you should be aware of the many complications that could cause problems. If you do not have the experience or background to understand legal jargon and court proceedings, you could fall prey to bankruptcy myths and misinformation during an already challenging time in your life. Instead of adding to your stress and worry, you can speak with someone who has the training, knowledge, and skill to make the process easier for you.
When you meet with our bankruptcy attorneys, we can take a lot of the burden off your shoulders. We can quickly assess your circumstances and advise you on potential solutions, allowing you to make an informed decision on how to proceed. You may even discover that you qualify for debt settlement instead of bankruptcy to satisfy aggressive creditors.
We also partner with approved credit counseling services to help you get your finances in order and understand how you reached this point. From there, we are by your side at every court appearance and can guide you through following your payment plan. If you need to convert to Chapter 7 bankruptcy, we are there to steer you through the process.
Factors to Consider Before Filing for Chapter 13 Bankruptcy
Before you commit to filing Chapter 13, it’s important to know that you may have less impactful options available, such as managing your debt more wisely or settling a debt with a collector individually. When you speak with a bankruptcy attorney, they can review your situation and make recommendations based on your ability to pay and how quickly you need to resolve the debt.
If you’ve suffered a layoff or other job loss, Chapter 7 or Chapter 13 bankruptcy could give you a chance to catch up on unpaid bills. If you are self-employed and considering bankruptcy, you should know that you face even more hurdles in separating your personal and business incomes. You may have investigated other avenues to avoid bankruptcy, such as selling your home if you are behind on the mortgage payments.
While filing for bankruptcy definitely affects your credit score, you can recover and move forward when the court discharges your debts. In fact, an excellent payment history during bankruptcy can show future creditors that you have adjusted your financial skills. Once you recover from bankruptcy, you can qualify for a home loan or car loan and rebuild your credit score.
Should You Try to Protect Your Assets Before Filing for Chapter 13 Bankruptcy?
If you have substantial assets, you may have already engaged in estate planning to hand them down to your heirs when you die. You may have established trusts that legally own property or other items. When facing bankruptcy, you may wonder whether you can transfer assets into a trust to protect them.
The general answer is no, since the bankruptcy court and trustee will examine your assets for the years prior to your filing. You must report any trusts you have created, what type they are, and when you created them. If you moved assets into a revocable trust, you are still legally in control of them, and they can be seized in a Chapter 7 bankruptcy.
If you have a revocable trust in a Chapter 13 filing, the court will want to know why you aren’t using those assets to pay your debts. If you use an irrevocable trust, which means you no longer have access to the trust’s assets, the court will investigate when you created the trust. In Washington, you must follow trust laws and the federal Bankruptcy Code, or the court may rule it a fraudulent transfer.
Contact the Seattle Chapter 13 Bankruptcy Lawyers at Symmes Law Group
At Symmes Law Group, we see clients every day with different reasons for filing for bankruptcy, yet everyone deserves experienced and compassionate guidance. We can help you decide whether to pursue bankruptcy or debt settlement, and we will provide superior legal representation for whatever solution you choose. Contact us online to arrange a consultation and learn more.
