I can’t afford a bankruptcy attorney, right?

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Bankruptcy Lawyers Chapter 7 Bankruptcy

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You Can Afford a Bankruptcy Lawyer

can't afford bankruptcy lawyerYou can afford a bankruptcy lawyer. Myths to the contrary are WRONG! And, as has been posted previously, to fail to hire an attorney to help prepare and file your bankruptcy petition, may expose you to all sorts of negative consequences. The worst of which could be dismissal of your case and a significant restriction or prohibition to re-filing.

The Creditors Are Paying Your Attorney’s Fees

In contemplating the payment of attorney’s fees in bankruptcy, one must shift ones thinking. In actuality, the creditors are paying your attorney’s fees! How can this be, you ask? Consider that upon the filing, and likely for month(s) prior to your filing, your attorney will advise you to stop paying on most, if not all, of your outstanding debts. Now, there will be exceptions to this concept, but generally speaking, what has happened? Those funds that you would have paid out for those minimum payments that go all to interest, and barely anything to principal, will now be paid to your attorney, instead. You see, now the money that once would have gone to the creditor, is now being paid to your attorney, and you can afford to pay those fees. And as has been suggested, you should pay those fees to obtain the best representation possible to guide you through this difficult time.

The Fee Structure Varies From Case to Case

Note that the fee structure varies from the type of case, and from region to region. In most places, Chapter 7 ‘straight’ attorneys fees must be paid in full, up front, before the case is filed. This is so, as the debt owing to the attorney is a dischargeable debt in Chapter 7, just like any other creditor. Now most bankruptcy attorneys will have payment plans to pay down on the outstanding fee, but recognize that the case cannot be filed without the full fee plus filing fees and attendant costs included. In Chapter 13 ‘debt reorganization’ plan, the fees are paid differently.

Paying Your Layer “Through the Plan”

Again, recognizing there are regional differences, but many attorneys will actually file a Chapter 13 payment plan, without any attorney’s fees paid up front. Yes, that’s right. Now, you must pay the filing fee and other attendant costs, but the base attorney’s fees will be paid ‘through’ the plan, along with the other creditors that will be paid. This ‘file now, pay later’ structure of Ch. 13 is one of the major reasons clients will choose this option over ‘straight’ Chapter 7. Either way, you can and should seek out the assistance of a qualified bankruptcy attorney to determine your best course of action, and to find out how you can afford to pay the attorney’s fees. Make the creditors pay!

John C. Colwell is a bankruptcy lawyer in San Diego.

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