How JustAnswer Works:

  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.

Ask Brent Blanchard Your Own Question

Brent Blanchard
Brent Blanchard, Bankruptcy Attorney
Category: Bankruptcy Law
Satisfied Customers: 1905
Experience:  Twelve years experience in all aspects of debtor & creditor BK.
Type Your Bankruptcy Law Question Here...
Brent Blanchard is online now
A new question is answered every 9 seconds

When a Loan becomes charged off does it then become an unsecured

Customer Question

When a Loan becomes charged off does it then become an unsecured debt and what is the percentage they are allowed in a chapter 13 bankruptcy?
Submitted: 5 years ago.
Category: Bankruptcy Law
Expert:  Brent Blanchard replied 5 years ago.
I have not seen any secured debts get charged off,Customer They have always been unsecured debts like credit cards, or the under-secured (and therefore nonsecured) portions of secured debts on personal property like cars or recreational vehicle "toys".

The "percentage" allowed in a Ch13 BK is totally dependent on the total "fund" of Plan payments available for debts of similar class. The order of payment is secured debts first, unsecured priority debts second, and unsecured nonpriority debts last. There are more, but these three are the most common. Generally, each class must be paid in full before any money goes to the next-lower class. If there is not a full payout under the Plan, the creditors in that last class share an equal percentage ("pro-rata") of the funds available.

Getting "charged off" just means the creditor is no longer seeking recovery. It's more of an accounting thing, with potential tax consequences to the debtor because of an IRS rule that some types of loan forgiveness = income. A creditor with a charged-off debt can still submit a creditor's claim in the BK and hope to get part of its money.

"Where the funds are" regarding canceled checks matters ONLY to whether the money was properly credited to the underlying debt. With $39 late fees, "global default" provisions jacking interest rates to 24.99% or more if you're late on any credit payment anywhere in the world, and other "fees" and such chargeable to a late-paying customer being written into so many credit agreements these days, it's very common for late partial payments to not make a dent in the principal balance owed.

If you terminate the law firm, they will still have a right to full payment for the services they have rendered to date. Much of that work does not appear in the BK schedules and paperwork already filed. Some work is undoubtedly in preparation for the next phase/events in your Ch13 and remains "invisible" but still real.

"Where do I go to be resourceful in this process to file suit independent of a lawyer?"

Sorry, but the best answer is "law school, with an emphasis on litigation, business entities and finance."

Second-best answer is your nearest law library, or a subscription to Westlaw, Lexis-Nexis, or Loislaw. Besides statutes and case law regarding the merits of your claim, you have state or federal court rules of civil procedure (including pretrial rules, discovery rules, evidentiary rules, some strict requirements for paperwork submissions the last 90 days before trial), and local court rules to deal with.

If you choose to go it alone, be advised up front that despite the neato-sounding name, "Corpus Juris Secundum" is probably the weakest authority to cite.

The biggest keywords to be aware of for the type of case you describe are "prudent investor rule" (and whether your opponent's duties included being limited by that rule in its investment management duties), "declining market", "depreciating assets", and "expert opinion" specifically regarding financial/investment disputes.

You deserve a candid statement of WHY an attorney believes you do not have a case. Legal analysis of the contract(s)/agreements and the terms of the trust itself is critical to assessing whether the filing fees and costs/expenses of suit would be worth the risk. I do not know the local amounts for each type cost and expense, but you need to find out:

1. Filing fee (usually nominal in the big picture, $350 or less in the states I've looked at);
2. Jury Demand fee;
3. Service of process fees (costs in court-talk)($50-200 per defendant, most of the time);
4. Publication costs if any defendant can't be found (on top of the service of process costs which must be incurred to prove that the person cannot be found);
5. Photocopy/document reproduction costs during discovery (searchable electronic formats are best if available) ranging from hundreds to thousands of dollars;
6. Expert witness fees (usually "expenses" in court-talk) which can make you realize that attorneys in many ways sell their services for cheap;
7. Court reporter fees for transcripts of depositions during the discovery process (costs in legal-talk) (these often equal about half the hourly cost of having an attorney there at the depo);
8. Postage, courier/document delivery, long-distance call, and other communications costs; and
9. Travel costs/expenses.

Depending on what statutes or legal doctrines used to seek recovery, some "expenses" might not be taxable as recoverable "costs" of suit if you win.

I strongly suggest that if the two attorneys who declined your case did so in a "free" consultation, that you schedule half-hour appointments with each of them to pay for a more detailed explanation of the laws, court rules, common law, evidentiary elements, and facts which combine to make each attorney make that conclusion.

Take good notes or ask for a letter outlining the discussion of the meeting.

Such money would be very well-spent to put the other attorney's reasonings in front of any attorney who is saying the case might be worthwhile. Often, a more informed or experienced attorney can see the "exceptions" or other reasons which overcome the other attorney's analysis saying there's not a good case. On the other hand, sometimes the skeptical attorney's facts and reasoning are valid and could take some of the "steam" out of a willing but perhaps mistaken or too-optimistic attorney's analysis.

It's not always JUST the fact that the opponent is a huge and well-financed litigation machine. Sometimes parts of a case suck so badly, it truly is NOT worth litigating.

As the claimant, you should get fully informed about the good, the bad, and the ugly of your situation. There's no substitute for getting competent legal advise on this before pulling the trigger on litigation.

I've seen many potential cases evaporate because the claimant's rights under the applicable contract were too weak. Without the cleverly-worded limits on what was promised by the other side, those consultation clients would have ordinarily had strong cases with provable damages and very high likelihoods of success.

Hope this helps.

BAB.

Please do not forget to click the green "Accept" button on the expert's answer so I can receive credit for my work.

Thank you.

Expert:  Brent Blanchard replied 5 years ago.
Is there anything in your question that remains unanswered?

Thank you.

BAB.

JustAnswer in the News:

 
 
 
Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.
 
 
 

What Customers are Saying:

 
 
 
  • Mr. Kaplun clearly had an exceptional understanding of the issue and was able to explain it concisely. I would recommend JustAnswer to anyone. Great service that lives up to its promises! Gary B. Edmond, OK
< Last | Next >
  • Mr. Kaplun clearly had an exceptional understanding of the issue and was able to explain it concisely. I would recommend JustAnswer to anyone. Great service that lives up to its promises! Gary B. Edmond, OK
  • My Expert was fast and seemed to have the answer to my taser question at the tips of her fingers. Communication was excellent. I left feeling confident in her answer. Eric Redwood City, CA
  • I am very pleased with JustAnswer as a place to go for divorce or criminal law knowledge and insight. Michael Wichita, KS
  • PaulMJD helped me with questions I had regarding an urgent legal matter. His answers were excellent. Three H. Houston, TX
  • Anne was extremely helpful. Her information put me in the right direction for action that kept me legal, possible saving me a ton of money in the future. Thank you again, Anne!! Elaine Atlanta, GA
  • It worked great. I had the facts and I presented them to my ex-landlord and she folded and returned my deposit. The 50 bucks I spent with you solved my problem. Tony Apopka, FL
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C. Freshfield, Liverpool, UK
 
 
 

Meet The Experts:

 
 
 
  • FiveStarLaw

    Attorney

    Satisfied Customers:

    3203
    Bankruptcy Lawyer. Experienced.
< Last | Next >
  • http://ww2.justanswer.com/uploads/FL/FLAandNYLawyer/2012-1-27_14349_3Fotolia25855429M.64x64.jpg FiveStarLaw's Avatar

    FiveStarLaw

    Attorney

    Satisfied Customers:

    3203
    Bankruptcy Lawyer. Experienced.
  • http://ww2.justanswer.com/uploads/TL/tleeders/2012-6-13_204815_TSL1.64x64.jpg Terry L.'s Avatar

    Terry L.

    Attorney

    Satisfied Customers:

    2204
    Better Business Bur 15yrs bankruptcy experience. Chicago Bar
  • http://ww2.justanswer.com/uploads/mnphillips2/2009-03-13_203105_10984459-249293407.jpeg Phillips Esq.'s Avatar

    Phillips Esq.

    Attorney-at-Law

    Satisfied Customers:

    950
    B.A.; M.B.A.; J.D.
  • http://ww2.justanswer.com/uploads/CO/cortrightlaw/2011-12-5_4117_Kevin.64x64.JPG cortrightlaw's Avatar

    cortrightlaw

    Attorney

    Satisfied Customers:

    490
    Attorney practicing Bankruptcy Law including Chapter 7, Chapter 11, Chapter 12, and Chapter 13.
  • http://ww2.justanswer.com/uploads/Jay1968/2006-12-03_004423_JoeRossPhoto.jpg JoeLawyer's Avatar

    JoeLawyer

    Attorney

    Satisfied Customers:

    376
    Attorney in the practice of Bankruptcy Law since 1996
  • http://ww2.justanswer.com/uploads/DY/Dylatess/2012-9-11_1968_BHBTemplePhoto.64x64.jpg dylatess's Avatar

    dylatess

    Attorney

    Satisfied Customers:

    370
    35 plus years of experience specializing in bankruptcy law
  • http://ww2.justanswer.com/uploads/US/USLawAnswers/2012-9-20_23143_20090105211638Headshot3b.64x64.jpg Brent Blanchard's Avatar

    Brent Blanchard

    Bankruptcy Attorney

    Satisfied Customers:

    315
    Twelve years experience in all aspects of debtor & creditor BK.