A dilemma often faced by debtors is the ability to pay for an attorney to guide them through the bankruptcy process. After all, if they cannot afford to pay their bills, how can they afford legal fees? When totalling up legal fees, court filing fees and other costs such as the mandatory credit counseling and debtor education classes, the costs for filing for bankruptcy often exceeds $2000.
One of the most common ways that debtors will save money for legal fees is to simply stop paying on debts that will be included in their bankruptcy petition. Most debtors struggle to make their minimum credit card payments when they could be using the money to hire an attorney. However, you should consult a qualified bankruptcy attorney before you stop paying your creditors.
Most bankruptcy attorneys will take payments over time so long as the fees are paid in full before the case is filed. For the most part, legal fees in a Chapter 7 case must be paid in full prior to the filing of the case. Otherwise, the money owed to the attorney is discharged like other debts.
Some creative attorneys will take a deposit and send a letter of representation to all of the debtor's creditors. This usually stops most creditor harassment for a period of time. In some cases, the creditors might violate state or federal fair debt collection laws and this could to lead to a monetary settlement that could provide the funds necessary for your bankruptcy legal fees.
Finally, a Chapter 13 bankruptcy is often an option to pay legal fees over time while still receiving the benefit of the automatic stay. In one current case, my client is 3 months behind on his car payment and he does not have the fees to pay for a Chapter 7 bankruptcy yet. His $2500 car has a $6500 loan against it, so we plan on filing a Chapter 13 bankruptcy to not only deal with the past due car payments, but to strip the lien from his vehicle down to the current value and pay his legal fees over time.
If you are struggling with how to pay for filing a bankruptcy case, please contact us to discuss your options.
About the Author: Carl H. Starrett II has been a licensed attorney since 1993 and is a member in good standing with the California State Bar and the San Diego County Bar Association. Mr. Starrett practices in the areas of bankruptcy, business litigation, construction, corporate planning and debt collection.
2 comments:
That's NOT a "solution," really, though! To stop making payments on some selected or all bills? What if, as is often the case with most debtors, the debtor has long done that ALREADY, any way?
He has long done that aready and just doesn't pay any creditor any more simply out of the fact that he has nothing - just ZERO money - to pay any one, creditor or anyone (even including a lawyer)?
What does he or she do then?
In every single bankruptcy case I have ever filed, there always is some fat in the budget that the debtor can trim. Based in my experience, I find it hard to accept that the debtor truly has no money left over to start saving for an attorney. It is always possible to cut things like cable TV, cell phone services and that $5 coffee from Starbucks.
If the debtor is truly that destitute that they cannot even afford an attorney, then there is mostly likely nothing a creditor can do to them anyway in terms of collecting the judgment. If they are judgment proof, then they really don't need to file for bankrtuptcy anyway.
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