Affording Your Bankruptcy

In every bankruptcy consultation, there comes a point where I know exactly what the potential client is thinking: “This all sounds great, I need to file bankruptcy, but what is this going to cost me?”  I am always up front with my legal fees.  I am one of the few attorneys out there that actually list what I charge on my website and will disclose them again here: For a typical Chapter 7 bankruptcy I charge $1,000, and for a typical Chapter 13 bankruptcy the charge is $3,000.  You can plan on there being about $350 on top of that in the form of a filing fee charged by the court and a couple of credit counseling classes you have to take.  I am definitely not the most expensive, but I am also not the cheapest; however, I do offer personal, professional, legal help, and you will work directly with me from day one until your case is discharged.

Affording Bankruptcy

So, back to the question that ever potential bankruptcy client is wondering: “If I am broke how am I going to pay you?”  It is a fair question, and below are a few suggested solutions to the problem:

1. Payment Plans.  I offer payment plans.  I do require a 20% deposit to get the case started and to officially hire me as your attorney.  You can then make payments on the remaining balance at your convenience.

One quick note, in chapter 7 bankruptcy cases the legal fees must be paid in full prior to your case being filed.  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 also one of your creditors.  It creates a conflict of interest, and essentially, my fee gets discharged with the rest of your unsecured debts.  So the total fee needs to be paid prior to filing.

2. Use the Money You Are Saving. When we meet in a bankruptcy consultation I discuss 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 in 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.

Additionally, I do occasionally get clients who are still trying to keep things afloat and are paying on all or some of their unsecured debts.  Once you decide that filing for bankruptcy is the right option for you, there is usually no reason to continue to make payments to the unsecured creditors, and that money can then be used to fund your bankruptcy.

3. Tax Refunds. During the spring of every year there is an uptick 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 clients use their retirement funds for their bankruptcy filing.  You will usually 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, bank levy, or repossession of a vehicle, and a bankruptcy needs to be filed quickly.   So in some instances, it may be a necessary evil.

5. Help From Family. It is not unusual to have a family member help you pay for your bankruptcy; however, it is important to know that if a family member loans you the money that their debt is discharged in the bankruptcy.  If they gift you the money or if you voluntarily repay them down the road that is fine.

How Not to Pay for Your Bankruptcy

You cannot charge your legal fees on your credit card as such a charge would be considered fraudulent since you obviously have no intention of paying back the debt at the time that it is incurred.  This and other charges on your credit cards in close proximity to the filing of a case can raise red flags for the court, and potentially get you in some trouble down the line.

My bankruptcy consultations are absolutely free.  We can sit down, 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 paid and help you start moving forward with your case.  For more information, visit the Law Office of Suzanne Szymoniak today.

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