I knew that my Social Security disability client had filed a bankruptcy with another lawyer but I was not aware that my client planned to use his lump sum past due benefit check to fund his Chapter 13 plan.
Not surprisingly, my disability client was especially unhappy when his case was turned down by the judge. I was not surprised – my client’s case was weak and he had appeared before a Social Security judge with a higher than average rate of denials. I was shocked, however, to learn that my client had promised his bankruptcy lawyer that his case was a slam dunk winner, and equally shocked the lawyer built the hoped for lump sum payment into my client’s Chapter 13 plan.
Hope and optimism are not stable foundations for your Chapter 13 case. Instead, Chapter 13 filers should look at their budgets with sober and unemotional expectations. Certainly unexpected surprises could bring positive news – an unexpected bonus, for example, or a raise. More likely than not, however, the same financial realities that prompted you to file for your debt reorganization will continue.
Your Chapter 13 lawyer may not know much about personal injury claims, work injury claims or disability. Your bankruptcy attorney will likely not prejudge the success or failure of your case. If you are facing a foreclosure, repossession or other financial crisis, your lawyer may very well accept as accurate your expectations an improvement in your economic situation. As one busy Chapter 13 lawyer here in Atlanta once told me “my job is to give my clients a chance to save their homes and cars. I can make the numbers work on paper – my client is responsible for making his case work in real life.”
I often advise my clients that if they are sitting in a bankruptcy lawyer’s office talking about filing, then everything needs to be on the table. Certainly no one wants to give up a house or a car, but if you cannot afford that debt in your Chapter 13, filing a case with an untenable budget does no one any good. Most Chapter 13 cases last five years and five years is a very long time to live on rice and beans, with no money available for home or vehicle repairs, or a family emergency.
My disability client ended up losing his house because he did not receive anticipated funds from Social Security. His Chapter 13 also failed and he lost hundreds of dollars in filing fees and attorney’s fees and he lost the leverage of using the threat of bankruptcy to negotiate deals with his creditors.
Don’t you fall into this trap. Your bankruptcy lawyer is on your side and you must be completely and brutally honest. Chapter 13 can solve a lot of problems and reduce your out of pocket costs in many situations. But a Chapter 13 case that never has a chance does you no good at all.
by Jonathan Ginsberg, Atlanta bankruptcy lawyer.