Many people are reluctant to see an attorney, especially if their funds are tight. It's a common belief to think that, if I'm broke how in the world can I afford an attorney? Often when doing a bankruptcy consultation the client is probably thinking, this all sounds great, I need to file bankruptcy, but what is this going to cost me? I always try and be up front with the legal fees I charge. So how much does it cost to file bankruptcy? Well this does depend on the complexity of your case but I can give you an estimate, once we've had our initial consultation. You will work directly with me from day one until your case is discharged. In addition to my fees, there is a filing fee charged by the court plus any costs for credit counseling. In chapter 7 bankruptcy case the legal fees must be paid in full prior to your case being filed with the bankruptcy court. The reason being, if you owe me money at the time of your bankruptcy filing, I am now not only your bankruptcy attorney, I am one of your creditors as well! It creates a conflict of interest so the fees need to be paid up front. So here's some ways the fees can be handled so that you can move forward with your Chapter 7 bankruptcy and make a fresh start.
1. Payment Plans. I offer payment plans. I do require a deposit to get the case started and to officially hire me as your attorney. You can then make payments on the remaining balance. I will work with you within your budget to come up with a payment plan that will work for your family.
2. Use the Money You Are Saving. When we meet in a bankruptcy consultation I discuss you with you not only what your debts are, but what your goals are, what property you would like to protect, and what secured debts (i.e. car, house) you will continue to pay. If you have decided to surrender your home or to let that car you are upside down on go back to the bank, there is usually no reason to continue to pay on those secured debts leading up to your bankruptcy filing. The funds you save there can be used to take care of the legal fees and court costs associated with filing bankruptcy.
3. Tax Refunds. During the spring of every year there is an increase in bankruptcy filings. This is largely due to the fact that people have a lump sum of money from their tax refunds that they can use to cover their bankruptcy costs.
4. Retirement Funds. I generally don't recommend that client's use their retirement funds for their bankruptcy filing. You will generally take a tax hit for early withdrawal and further those are protected funds, even during your bankruptcy. However, in certain circumstances it is the only option. The choice often comes down to filing your case or risking foreclosure, wage garnishment, and a bankruptcy needs to be filed quickly. In certain cases it needs to be done.
5. Help From Family. It is not unusual to have help from a family member in getting your bankruptcy case filed. It is important to know that if a family member loans you the money that their debt is discharged in the bankruptcy as well. However if they gift you the money or if you voluntarily repay them down the road there is no problem with that.
There is one place where the money cannot come from. Credit cards. You cannot charge your legal fees on your credit card. It would be nice for all involved, but it is not going to fly.
I offer a free 30 minute telephone consultation where we can discuss your situation, and help you determine if bankruptcy is a good option for you. If it is, I will help you work out a plan on how the bankruptcy costs can be put together and help you start moving forward with your case.