What if I Cannot Afford a Bankruptcy Attorney?

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.

Don't Get a Christmas Debt Hangover

According to Wikipedia, "Consumerism is the equation of personal happiness with the purchase of material possessions and consumption" or "retail therapy" as my wife calls it. This results in an odd phenomena I often see debtors go through this time of year: guilty over not being able to purchase Christmas presents for friends and family. We often end up counseling clients that regaining control over their finances is more important than buying Christmas presents.

When January rolls around, will you be suffering from the guilt of a Christmas debt hangover? These tips should help prevent a holiday financial catastrophe:

1. Reduce your gift exchange list. Do you really need to to purchase gifts your 3 aunts, 2 uncles, 10 cousins and the odd assortment of nieces and nephews? Probably not. Just be honest with your friends and family and exchange greeting cards instead.
2. Budget, budget, budget: Make a list of who you really must purchase gifts for, set a dollar limit and stick to your budget. After you make your list, refer to Rule No. 1.
3. Don't use credit cards to purchase gifts. Unless you are the type of person who is extremely disciplined and pays off the credit card bill each month after accumulating airline miles, avoid the temptation to delay paying for the purchase. If you do purchase a Christmas gift on a credit card, refer to Rule No. 1.
4. Shop online instead of at the mall. Shopping at a mall can often lead to those impulse purchases that you end up regretting later. Take the time to research your purchase carefully. If you shop online, only use a well-established website such as Amazon.
5. Host a holiday pot luck instead of exchanging gifts. Christmas memories of pleasant times with friends and family will last longer than a forgotten trinket.
6. Buy smarter. Clip coupons, search the Internet for bargains and watch your Sunday paper for holiday sales.
7. Start buying now. If you purchase your gifts early and a few at a time, you'll be under less pressure closer to Christmas and less likely to overpay for an impulse purchase.
8. Avoid Starbucks. Instead of spending money on a $5 latte, save that money for Christmas gifts. You would be surprised how quickly the cost of self-indulgence adds up.
9. Buy gift cards. You typically spend less on a gift card than a present and the recipient can choose choose something they want.
10. Avoid the extras. Christmas is the time of year for "extras"...that one little extra decoration, the stocking stuffers, the last minute gift that seems so perfect. Refer to Rule No. 1 and Rule No. 2.

True friends and family don't want you be stressed or overcome by holiday debt. Spend wisely and without guilt.

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.