Many people filing a Chapter 13 Bankruptcy do so in order to save their homes, or to strip off a second mortgage. Depending on your income level and ability to pay, a Chapter 13 plan may be 36 months long or up to 60 months (5 years) long. Since most attorneys take at least some of their fees through plan payments, the amount the attorney charges could increase your monthly payments or extend the life of your plan. For instance, if you are $12,000 behind on your mortgage, and you qualified for a 36 month plan, you would have to pay 333 a month just to pay the arrearage on the mortgage. If your attorneys fee is $6,000 that would add another $166 a month to your payments without any money being paid to the creditors. If you can’t afford those payments the plan will have to be extended out, as much as two additional years, in order to make the plan work. Under those circumstances you would loose two additional years of income tax returns, which are required to be paid to the creditors during the plan. So while your attorney might tell you his fee is just going to reduce the amount the unsecured creditors will pay, a large fee may end up costing you much more than you think.
