Are you considering bankruptcy?

If you are considering bankruptcy, we don’t have to tell you this can be an incredibly difficult decision to make and can present many fears and anticipate a long and stressful road ahead. However, a lot of our fears are fueled by not knowing what our options are. Once informed and assured that you are making the best financial decision for yourself, your family or your company as the case may be, a lot of that stress can be alleviated as you know what to expect and how to prepare for it.

As stated by the US Supreme Court, bankruptcy gives “the honest but unfortunate debtor . . . a new opportunity in life and a clear field for the future, unhampered by the pressure and discouragement of preexisting debt.”  Local Loan Co. v. Hunt, 292 U.S. 234, 244 (1934). 

You may be worried that you cannot afford a reputable lawyer to handle your Chapter 7 or Chapter 13 bankruptcy. Times are already tough, and this is another expense to add to your worries. Indeed, as you get ready to discharge overwhelming debts which by now may seem hopelessly out of control, the last thing you want to do is add an unnecessary extra financial strain. Here we will discuss your options and if in fact you even need to hire a lawyer. Of course, we are here to help, however only you can make an informed decision as to what is best for you and if hiring a bankruptcy lawyer is the best choice for you.

Which is right for you? Comparing Chapter 7 and Chapter 13 bankruptcy

Neither Chapter 7 nor Chapter 13 bankruptcy laws require you to use an attorney to file bankruptcy. It is most definitely a good idea to at least meet with a lawyer before filing, however if yours is a fairly simple Chapter 7, you may opt to file on your own.  Chapter 7 bankruptcies do show better chances of successful discharge when filed by individuals than do Chapter 13 cases.

That being said, it is still in your best interest to work with an attorney if at all possible. Bankruptcy law is complex and you want to be sure that you are protected and don’t unnecessarily expose yourself and any nonexempt assets. It is crucial that all court rules and procedures are followed precisely, and a good bankruptcy legal team does a great deal of research to ensure that these procedures are followed, as well as exemption laws to best protect you.  Even a small oversight can have very undesirable repercussions or even risk not achieving full discharge of all your debts.

Finding an experienced Bankruptcy Lawyer

While its true that legal fees for filing bankruptcy can cost hundreds or thousands of dollars, it may be very well worth hiring an experienced bankruptcy attorney, as your risk of having your case dismissed increases significantly when you don’t have professional legal counsel guiding you through the bankruptcy process.

While contemplating filing for bankruptcy, it’s important to remember that your situation is not unique. Most people who find theirselves in over their heads in debt are in the same position: that is, unsure how they will pay a bankruptcy attorney. Some attorneys will allow you to pay their fees for a Chapter 7 bankruptcy on an installment plan, but remember that your case will not be filed until they are paid in full. Other possible options you may want to seek out are a pro bono attorney or the services of a legal aid society. You may also want to consider a Chapter 13 bankruptcy filing instead of Chapter 7.

You have options: Making Chapter 7 filing more affordable

Some lawyers offer a split retention agreement can take some of the pressure off in the case of your Chapter 7 bankruptcy. in essence you’ll be paying your case in two separate retention agreements. What this does is helps to avoid the issue of dischargeable fees. In this instance, you initially hire and pay your attorney to prepare and file for you only. Once filed, you draw up a separate agreement for representation for the rest of the bankruptcy proceedings, for which your attorney will draw up a payment plan to allow you to pay off the fees over an agreed upon period of time. Generally, as with any such plan which allows for more time to pay, your attorney will likely charge higher fees, but the lower financial outlay upfront and the peace of mind of getting it done right can make it well worth paying any extra fees. You do still have the option to work directly with a trustee or creditors if you wish, as with two separate retention agreements you are not obligated to hire the same attorney for the second phase of your bankruptcy case. Not all courts allow split retention agreements, so do your due diligence and explore your options before committing. 

Chapter 13 bankruptcy repayment plans

While Chapter 7 bankruptcy focuses on discharging debt, the objective of a Chapter 13 filing is to create a feasible repayment plan. With Chapter 13 bankruptcy you do also always have the option to pay your attorney fees in installments. This can make Chapter 13 filing a better fit for those who need to file bankruptcy but don’t have access to sufficient funds to cover filing fees upfront.

You may really wish to file Chapter 7 and simply have all of your debts discharged, however not everyone qualifies for Chapter 7. For example income or past due car loan or home mortgage payments can prevent you from qualifying. In this case Chapter 13 is your next option. However, it is a much longer and more complicated process than Chapter 7. Chapter 13 filings involve court approved repayment plans which take 3 to 5 years. Chapter 13 bankruptcies require more time and involvement from your lawyer, which will result in higher fees. The good news is that it is not uncommon for attorneys to accept at least a portion of this from your repayment plan. Just like a home mortgage amortization that begins with most of your payments going toward interest, the better part of your first payments will go toward paying off legal fees before your creditor accounts. A trustee will handle the distribution of your payments so you don’t need to worry about your money going to the correct entities.

More options: Start with Chapter 13 and convert to Chapter 7

If the whole process is overwhelming and you don’t know where to start and don’t even feel you can afford filing fees right out of the gate, another option is to start your case as a Chapter 13 filing. Once your attorney fees have been paid through your payment plan, converting to Chapter 7 may be possible. Not all courts allow it, but it is worth checking to see if this may be an option available to you.

Free initial consultation with our experienced legal team

Are you considering bankruptcy? We know what a difficult process this is, and your best chance of getting a good result is with the guidance of an experienced bankruptcy attorney. We are here to help you explore your options. Email us here or call 1(877) 375-9599 to schedule a free consultation.