Perspective on Bankruptcy bill
Books on bankruptcy
Bankruptcy in Briefa service of the Moran Law Group |
Paying for bankruptcy
Those deep enough in debt to consider bankruptcy generally don't have the cash on hand to easily fund the bankruptcy filing necessary to get relief.
The most common way to accumulate the cash to file bankruptcy
is to stop making payments on dischargeable
debts, and save that money toward a bankruptcy filing.
In the real world, it takes many weeks, if not months, for a creditor who decides to sue
you to actually get a judgment that permits the creditor to seize your
property or your wages. Since lawsuits cost money, most creditors
rely on nasty letters and harassing phone calls for a long while before
suing.
So, you have time to save money to pay for a bankruptcy solution. If you don't have time.
Funding Chapter 13
In contrast to Chapter 7, Chapter 13 attorney's fees can be financed, as it were! Usually debtors pay a portion of the attorneys fees and all of the filing fee ($274) before filing. The balance of the fees are paid from the monthly payments that the debtor makes to the trustee. More on Chapter 13.
What does it cost?
The court's filing fees are standard nationwide:
Chapter 7 $299
Chapter 13 $274
Attorneys fees vary from community to community and from the simple situation to the complex. Although it may seem painful to pay money for legal advice to go bankrupt, the more assets you have or the more questions there are about the discharge of your debts, the more important it becomes to have a lawyer, as opposed to a paralegal or doing it yourself. Without a lawyer, you may be betting your house that you or a paralegal without a license, know what they are doing in a bankruptcy court.
Cost & complexity argue for Chapter 13
The 2005 bankruptcy amendments have studded the bankruptcy process with additional complexities and paper shuffling hoops to jump through, which have raised attorneys fees for guidance through the maze.
When the upfront cost of a Chapter 7 is coupled with the UST challenges to Chapter 7 eligibility, it may be best to file Chapter 13 so that the cost of good legal representation can be paid over the life of the Chapter 13 plan and the means test can be avoided.