Creditor Bankruptcy

At Stone, Higgs & Drexler, we handle a broad range of legal services in consumer bankruptcies (Chapter 13 and Chapter 7). Because of the distance and costs, we may refer you to other firms concentrating in consumer bankruptcies in Jackson, Nashville, Chattanooga, and Knoxville.

Creditor representation is available in Chapter 11 proceedings based upon an hourly fee rate of $175.00, plus any applicable court costs.

For cases referred to us in the Western District of Tennessee, Western Division (Memphis, Tennessee), an attorney monitors the meeting of creditors (Section 341 meeting), and prepares appropriate pleadings, such as objections to confirmation, motions to amend plan, motions to lift stay, complaints to determinedischargeability of debt and objection to discharge. Your instructions and the entire circumstances determine the course of representation. In Chapter 13 proceedings, see below regarding typical fees and applicable services, depending upon venue. Fees are negotiable for clients depending upon volume.

Service	Fee
Preparation and filing proof of claim, first meeting of creditors is monitored, (only if in Memphis), evaluation plan, written report to client.	$200.00
Objections to Confirmation, Motions to Lift Co-Maker Stay, Motions to Amend Plan, Motions for Adequate Protection	$250.00
Motions to Lift Stay to Recover Personal Property	$300.00 + court cost
Motions to Lift Stay to Recover Real Property	$350.00 + court cost
Complaint to Determine Dischargeability of Debt and Objection to Discharge	$750.00 + court cost

Procedure

1. Chapter 13 plans are typically set for confirmation two weeks after the Section 341 First Meeting of Creditors unless delayed by an objection to confirmation or nonpayment by the debtor. No payments are disbursed until confirmation. Disbursements are made on the 10th of each month.
2. You should expect payments on secured claims no sooner than 120 days following the date of confirmation. Interest of 15 percent per annum is usually allowed on secured claims in the Western Division (Memphis, Tennessee) and 12 percent in the Eastern Division of the Western District (Jackson, Tennessee). Interest may be set lower if the contractual rate is less than 10 percent, or higher to protect the co-maker or where the loan was recently made.
3. Unsecured loans are not paid with interest and will not receive payment until after secured creditors are paid in full. If there are no secured creditors, payments could begin in four months after the date of confirmation, but as most cases have secured claims, payments to unsecured creditors usually begin in 3 or 4 years. Plans are usually filed in the Western Division for a 60 month term. The percentage payable to unsecured claims is usually set by the trustee after the bar date for filing claims (90 days from date of confirmation) that are often paid at the rate of 100 percent. Unsecured claims in the Western Division cannot be paid less than one percent and no less than the creditor would receive if the debtor had filed a straight Chapter 7 bankruptcy liquidation case.
4. Valuation issues are typically governed by the Supreme Court case of Rash v. Rash which interprets Section 506 (a) as not setting a liquidation value on motor vehicles, because the debtor's proposal to retain the collateral; thereby dispensing with costs associated with public sales. Retail valuation is often obtainable.
5. Lien avoidances under the Owens vs. Owens decision often causes us to compromise valuation of household goods used for the daily support of the debtor or his dependents. If the collateral is not consumer household goods, not used in the ordinary support of daily family life for the debtor or dependents; luxury in nature; or exceeds $4,000.00 in value in the case of one debtor or $8,000.00 for joint debtors, then we are often able to obtain full valuation.
6. Tennessee Bankruptcy Courts have opted out of Federal Exemptions and use state exemptions that may be briefly summarized as follows: Homestead exemption - $7,500.00 for a couple and $5,000.00 for an individual; personal property exemption - $4,000.00 per one, and $8,000.00 for joint debtors; tools of trade and IRS qualified retirement plans - absolute.
7. Motions to dismiss for nonpayment are often negated in the first instance, by a debtor's motion to suspend payments for a period not exceeding 90 days. The judges have been predisposed to deny motions to dismiss or for relief from automatic stay. Objections to confirmation will be granted if it is evident that the debtor has shown bad faith by means of serial filings (usually three or more) and motions to lift stay will be granted when there is no means by which the debtor can provide adequate protection. However, this concept is liberally constructed in favor of the debtors.
8. Comprehensive and collision automobile insurance is compulsory, and is provided through the plan for most cars and trucks.
9. Leases and mortgage arrearages are usually allowed to be cured with ongoing mortgage payments provided through the plan and ongoing lease payments paid direct to the landlord. We are often able to obtain (drop dead) provisions in an order on motion to dismiss or lift stay, which provides for the stay to be lifted immediately and automatically upon the failure of any future payment being missed (usually after notice to the debtors).
10. Chapter 7 cases are filed 3 times less frequently than Chapter 13 cases in the Western Division of Tennessee. Reaffirmation Agreements or Abandonments by the trustee and the debtor are usually obtained at the first meeting of creditors. The deadline for filing a complaint to determine dischargeability of debt or objection to confirmation is strictly enforced.

Please remember that charges and costs for filing suits, motions, or other pleadings are imposed by the court clerk's office and are not to be considered compensation to Stone, Higgs & Drexler as attorney fees.