Options If You Can't Afford a Chapter 7 Bankruptcy Lawyer

Here's what to do if you can't afford the legal fees of a Chapter 7 bankruptcy attorney.

By , Attorney · University of the Pacific McGeorge School of Law

Many debtors have a difficult time affording the fees charged by attorneys for Chapter 7 bankruptcy. But payment options exist. If you can't afford a Chapter 7 bankruptcy lawyer, consider whether one of the following strategies might work for you:

  • stop making payments on debts that will get wiped out in bankruptcy and pay your attorney instead
  • borrow the fees from a friend, family member, or even your employer
  • retain a bankruptcy lawyer who will handle creditor calls while you pay fees over time
  • file on your own
  • obtain assistance from a free clinic, legal aid society, or pro bono attorney, or
  • file for Chapter 13 bankruptcy and pay attorney fees through your repayment plan.

We also explain why paying your bankruptcy lawyer with a personal credit card isn't an option, although someone else can use a credit card to pay on your behalf. If you're considering Chapter 13 as a way of financing bankruptcy fees, you'll want first to determine whether Chapter 7 or Chapter 13 will be the better bankruptcy option for you.

Paying a Bankruptcy Attorney Instead of Certain Creditors

When you file for Chapter 7 bankruptcy, the court and your creditors assume that you'll stop paying bills that will be "discharged" or wiped out and use the funds to pay legal fees instead. For instance, credit card payments, medical bills, past-due utility payments, and personal loans (such as payday loans) usually qualify for a discharge.

However, it can be challenging to catch up once you fall behind on payments. You'll want to be sure you'll qualify for Chapter 7 before using this strategy by meeting with a bankruptcy attorney who can help with the assessment.

If you want to keep a house, a car, or another type of property you're paying for on credit, and you pledged the property as collateral to secure loan payment, you'll need to stay current on the payment before and after the bankruptcy. Otherwise, the lender will be able to take the property. So unless you're willing to lose your home or car, continue paying the mortgage or car payment.

Borrowing Attorneys' Fees

Most people feel great relief after meeting with a bankruptcy lawyer and want to start the bankruptcy process immediately. If you don't have the funds to pay your legal fees, it's common to turn to friends and family for help, sometimes even employers.

Many people are understanding when it comes to a request for help with bankruptcy fees. It could be because it's cheaper to help someone fix a financial problem once and for all using bankruptcy instead of helping out on an ongoing basis.

Before reaching out to your friends and family, consider learning how much the average Chapter 7 costs and how much bankruptcy lawyers charge for Chapter 13.

Other Required Fees

Filing for bankruptcy comes with costs other than attorneys' fees. Bankruptcy filers must take two educational courses and pay a bankruptcy filing fee. However, low-income filers can often get both waived.

The bankruptcy filing fee is an amount due when you file your initial paperwork with the court clerk. The fees change periodically, but you can find the current cost for both Chapter 7 and Chapter 13 cases in Bankruptcy Filing Fees and Costs.

If you plan to file for Chapter 7, you might qualify for a fee waiver if your income is within 150% of the federal poverty guidelines. Otherwise, you might be able to pay the fee in up to four installments. To apply for either, you'll complete and submit the official request forms with your initial bankruptcy petition. The court will notify you if the judge approves the waiver or installment arrangement.

If you opt for an installment plan, making timely payments is essential. Otherwise, the court might dismiss your bankruptcy filing. You'd have to file a motion asking the court to reopen your case and pay the entire filing fee. A fee waiver isn't available in Chapter 13.

Retaining a Lawyer to Field Creditor Calls While Making Payments

The automatic stay order that stops creditors from collecting doesn't go into effect until you file the bankruptcy case. However, once you hire an attorney, you can cut down on annoying calls by instructing creditors to call your lawyer instead of you.

Some lawyers will let you pay a retainer as low as $100 and the remaining attorneys' fees in installments. Creditors must contact your lawyer when you're represented, so this approach will cut down on annoying creditor calls while you save for your attorneys' fees. Still, it won't stop creditors from engaging in other collection activities, such as garnishing wages or levying against a bank account.

Although many lawyers offer payment plans, whether a lawyer will file your case before you pay the entire legal retainer will depend on whether you file for Chapter 7 or Chapter 13. A Chapter 7 lawyer won't file your Chapter 7 case until you pay all legal fees fully and for a good reason. The bankruptcy filing would wipe out any amount owed to your attorney.

A Chapter 13 lawyer might file your matter after you've paid as little as $100. Bankruptcy rules allow lawyers to be paid the remaining balance owed through the Chapter 13 plan.

Filing for Chapter 7 Bankruptcy Without an Attorney

You aren't required to have an attorney when filing for bankruptcy relief. Whether you should, however, will depend on how complicated your case is and how comfortable you are researching the law and filing on your own.

In general, people with a simple case will be better able to complete a Chapter 7 bankruptcy. For instance, if your income is low and you pass the first step of the Chapter 7 means test (the test you'll take to qualify for a Chapter 7 discharge), you have little or no property, you can wipe out all or most of your debt, and your creditors aren't likely to allege fraud against you, preparing your case will be possible.

However, bankruptcy laws are involved, and filing for bankruptcy without a lawyer isn't easy. If you aren't willing to invest the necessary research time, you'll risk losing unprotected (nonexempt) assets. Or, you might learn that your debts won't be eliminated in bankruptcy.

All Chapter 7 cases require you to fill out extensive bankruptcy forms, research exemption laws to protect property, and follow all local court rules and procedures. If you aren't comfortable doing the work and assuming the risk, consult a bankruptcy lawyer.

If you'd like to file yourself, consider using a good bankruptcy self-help book. You'll find step-by-step instructions on how to file for Chapter 7 bankruptcy in How to File for Chapter 7 Bankruptcy, by Attorney Cara O'Neill (Nolo).)

Free Clinics, Legal Aid, and Pro Bono Attorneys

Resources are available to debtors who can't afford a bankruptcy attorney, but they vary depending on where you live. Some bankruptcy courts have free clinics to help debtors file for bankruptcy relief on their own. Contact your bankruptcy court to determine the services offered or for a list of free services or programs available in your area.

Legal aid societies and pro bono attorneys provide free legal services or assistance to low-income individuals in most states. Contact your local legal aid society, state bar, or bankruptcy lawyers to find out about aid for people who wish to file for Chapter 7 bankruptcy but can't afford an attorney.

Filing for Chapter 13 Bankruptcy

Filing for Chapter 13 bankruptcy allows debtors to pay all or a portion of their attorneys' fees through their repayment plan, which can be great if you can't pay all the attorney fees upfront. But this chapter doesn't work for everyone.

It's primarily for higher-income debtors who don't qualify for Chapter 7 and can afford to pay back a certain amount of their credit card balances and other unsecured debt. Or for filers who need to catch up on mortgage arrears, back car loan payments, or tax debts. If you don't have enough income to afford to pay into a Chapter 13 plan, you won't qualify.

Further, bankruptcy courts don't usually allow Chapter 13 cases designed to pay only attorney fees through the plan, and the reasoning makes sense. You would have to pay the Chapter 13 bankruptcy trustee a percentage you wouldn't pay in Chapter 7, which would make financing the fees using Chapter 13 more costly than it might seem.

Can You Pay a Bankruptcy Lawyer With a Credit Card?

The answer is yes and no. Yes, you can pay your lawyer's retainer using someone else's credit card, assuming they agree, of course. But no, you can't use your own credit card to pay your legal fees.

Attorneys can take credit cards from friends or relatives willing to pay the fee for you, and it happens regularly. The only requirement is that you disclose who paid for your legal services in your bankruptcy paperwork, which is the case anytime someone pays on your behalf, regardless of how payment is made.

A bankruptcy lawyer can't allow you to pay for fees using your credit card. Bankruptcy lawyers can't advise you to incur more debt shortly before a bankruptcy filing for anything other than necessary services, such as food, gas, and warm clothing. Charging unnecessary luxury items and services on a credit card or taking out cash advances shortly before bankruptcy can get you into trouble, even if you intend to pay the credit card charges.

So, your lawyer will happily take a credit card payment for fees paid on your behalf but don't expect your lawyer to accept your credit card for payment.

You'll Get Stuck Paying Credit Card Charges Made Shortly Before Bankruptcy

Lawmakers recognize that some people considering bankruptcy could be tempted to run up debts before filing a case, which wouldn't be fair to creditors. Bankruptcy law has provisions that make many of those last-minute debts potentially nondischargeable.

For instance, there are two ways a creditor could challenge a charge made shortly before filing:

In either case, the creditor could file an adversary proceeding (lawsuit) in your bankruptcy case to challenge the discharge of the debt. However, charging necessary items, such as food and clothing, is permissible, assuming they're needed and reasonably priced.

Need More Bankruptcy Help?

Did you know Nolo has made the law accessible for over fifty years? It's true, and we want to ensure you find what you need. Below, you'll find more articles explaining how bankruptcy works. And don't forget that our bankruptcy homepage is the best place to start if you have other questions!

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We wholeheartedly encourage research and learning, but online articles can't address all bankruptcy issues or the facts of your case. The best way to protect your assets in bankruptcy is by hiring a local bankruptcy lawyer.

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