Get Out of Debt Guy

We Are Not Happy With Our Bankruptcy Attorney. - William

Posted April 23, 2013

WRAL Reader Asks

Dear Steve,

During the recession, we had to close our small business. We purchased the business from someone and unfortunately their attorney did not file the incorporation properly and my attorney did not catch it during the sale. This allowed the corporate veil to be pierced and I became personally liable for the debt and taxes.

Two years ago, we filed Chapter 13 were we settled the taxes and debt and are on a 5 year payment plan.

I have two questions:

1) Our attorney told us our payment would not increase. Our payment has increased 3 times, almost doubling our original payment. We have had no increase in income but have seen an increase in expenses. Our net take home pay is less than our original filing. How can our payment increase once we are in Chapter 13? It has really put us in difficult situation.

2) Can we fire our attorney? She has been terrible. Our most recent payment increase was due to our attorney failing to file her fees with the court. She justified the increase in payment with the court by recommending (and the court went along) that we drop our $800+ monthly health insurance. This has set us up to fail if we or any of our kids has a medical emergency.



Dear William,

That certainly seems like an unreasonable situation. Especially considering the massive financial exposure to medical debt by dropping your health insurance coverage.

There are legitimate reasons why a chapter 13 payment might increase when child support ends of a retirement loan is repaid while still in the plan. Payments might also increase if there has been an increase in income as well.

But from what you've shared, none of those reasons seem to apply in your situation. Right now, the payment increase is a mystery that needs to be solved.

It seems clear that no matter what, you should seek at least a second opinion to help better understand your options and possible plan of action to address this situation.

Seeking a second opinion is an appropriate thing to do to help gain a different point of view to allow you to make a fully informed decision about how to proceed. The second opinion from a different bankruptcy lawyer will give you either more understanding as to why things have rolled out like they have or advice and assistance to change this situation.

If I was in your shoes I would get a second opinion from a different bankruptcy attorney. You may have to pay for the appointment but it will be a worthwhile expense to gain some clarity.

I'd also suggest that you head into this second opinion process not in a desire to prove your current attorney wrong but in an effort to understand all of your options and solutions to address the issue. We really don't need to waste time pointing fingers as much as we need to remedy the situation moving forward. 

In order to help you on this journey, please read my guide, How to Find a Great Bankruptcy Attorney. You can also click here to find a local bankruptcy attorney.

Let me know what happens by posting an update in the comments below.

Steve Rhode
WRAL Get Out of Debt Guy

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  • Terkel Apr 23, 2013

    If you can find an attorney to sue another one, that is. I couldn't, when the bankruptcy attorney refused to show my offer to the lienholders of a short sale property I attempted to buy. My attorney said his firm represented Lawyers Indemnity and it would have been a conflict of interest.

    Sadly, I've learned there's the letter of the law, and then there's the real world that we little guys inhabit.

  • steverhode Apr 23, 2013

    Attorneys are sued for malpractice.

  • common tater Apr 23, 2013

    Sad that they hire an attorney to make sure all bases are covered on the corporation, and he/she drops the ball. Can a lawyer be sued for malpractice? From my experience, lawyers as a group only do the minimum to keep the checks coming...and a lot of stuff slips through the cracks as a result

About this Blog:

Steve Rhode has had careers in opthalmology, real estate and as the head of a nonprofit debt counseling firm. On his blog, he offers hard-won, free advice about getting out of debt, consolidation and making the right choices as you manage your money.