There is a horrible myth that all attorneys are out to get your money and, no matter why you come to see the attorney, they will find a way to get yours.
This has not been my experience, and is counter to all we do at Steidl and Steinberg. We want to help, and if we cannot help, we don’t want your money.
Here's an example.
A potential client came to us last year. That person had a $200,000 home and a $30,000 mortgage, with payments of about $600.00 including taxes and insurance. The client had a good job and a vehicle that was paid off and the living expenses were nothing unusual. In fact, if we subtract their normal living expenses from the monthly net income, there is a surplus of almost $1,500.00 before paying on $22,000 in credit cards.
So we talked. The client didn’t like paying high interest rates, but had already negotiated zero percent interest rates with almost everyone, which is quite extraordinary. The payments on the credit cards were much less than the surplus they enjoyed every month.
We looked at various alternatives. AdvantageCCCS is an excellent agency that works with the creditors to reduce your interest rates. But they were already at zero percent, so this wasn’t the answer. We looked at debt settlement, but since the payments were relatively current, they weren't going to save much here. If they go into default, they will rack up interest, fees, and penalties that won’t be pretty. Further, finding a legitimate agency that does this kind of work is difficult.
Bankruptcy options were discussed but this person makes too much money, has too much equity in the house, and the income/expense ratio took them out of Chapter 7 consideration. We looked at Chapter 13, which is a great option in many cases, but not this one.
Let’s look at why I did not recommend this route.
1. The equity in their home means they would have to pay all of their creditors in full, unlike those with less equity who may be able to pay their unsecured creditors back at anywhere from zero percent to 100 percent. No savings there.
2. The income/expense ratio suggests they could pay up to $1,500.00 per month on the debt. They wouldn't have to do this in a Chapter 13 bankruptcy, they could do this on their own.
3. The Chapter 13 bankruptcy, while reasonably priced, would add attorney’s fees, trustee fees, and court costs to the mix. Why do that when you can pay off all of the creditors on your own in less than two years just by paying them that $1,500.00 in disposable income?
At the end of the free consultation, I told them to pay the creditors on their own. Don’t pay an attorney to do what they can do themselves.
Over the last two years, they have referred four clients to Steidl and Steinberg, telling each one of them that we were honest, went over all of the alternatives, and helped them choose the best one, even though we didn’t make any money from it.
Surprised? Don’t be. We are here to help, even if we don’t get your business.