Expert: Terry Leeders - 4/27/2009

Question
We are currently considering chapter 13, due to debt incurred when building
our new home, among other things.  We are currently in litigatation against
our builder, and owe the firm representing us approx 1500 dollars.  We can
currently pay our mortgage, car loans, payment agreement with the law firm
without a problem, but the unsecured debt and loans put us way over the
top.  Is it better to file now (with another firm), or to pay "just what we can"
on the unsecured debt for a while as to pay off laywer, etc.  basically, just
want to know better now or later?

Answer
Hi there.  There is really no time frame to worry about with a chapter 13.  The attorneys fees owed when filing will need to be put into the plan.  If you pay the attorney off first, you will need to pay back that same amount into the plan to your other creditors as well, to offset any preference payment.  So, the choice is really up to you, but I would advise filing right away and not paying the lawyer right before filing.