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.

Many debtors have a difficult time affording the fees charged by attorneys for Chapter 7 bankruptcy. But payment options exist. If you don’t think that you can afford a Chapter 7 bankruptcy lawyer, consider whether one of the following 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 your 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.

(For comprehensive information about this bankruptcy type, see Chapter 7 Bankruptcy.)

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 making payments on bills that will get discharged (wiped out) in your bankruptcy case 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, once you fall behind on payments, it can be difficult to catch up. So you’ll want to be sure that you’ll qualify for Chapter 7 before using this strategy (a bankruptcy attorney can help with the assessment).

Also, if you want to keep a house, a car, or another type of property that you’re paying for on credit and that you pledged as collateral to secure loan payment, you’ll need to stay current before and after the bankruptcy. Otherwise, the lender will be able to take the property.

Borrowing Attorneys’ Fees

After meeting with a bankruptcy lawyer, you can expect to feel a great sense of relief (it’s wonderful knowing that a solution is in sight) and want to get the process started. Many people who don’t have the funds turn to friends and family—and sometimes even employers—and find most understanding when it comes to a request for help with bankruptcy fees. It’s likely because it’s cheaper to help someone fix a financial problem once and for all, rather than to help out on an ongoing basis.

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 (although 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 out 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 along 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, it’s important to make timely payments. Otherwise, the court might dismiss your bankruptcy filing. (You’ll have to file a motion asking the court to reopen your case, as well as pay the entire filing fee.) A fee waiver isn’t available in Chapter 13.

You can find information about the two required courses in Credit Counseling & Debtor Education Requirements in Bankruptcy.

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 then pay the remaining attorneys’ fees in installments. However, even though many lawyers offer payment plans, they won’t file your case until all fees are paid in full—and for a good reason. Any amount owed to your attorney would get wiped out in the bankruptcy filing.

Also, keep in mind that this approach will cut down on annoying calls while you save for your attorneys’ fees, but it won’t stop creditors from engaging in other collection activities, such as garnishing your wages or levying against a bank account.

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 who have a simple case will be in a better position to complete a Chapter 7 bankruptcy. For instance, if your income is below the state median, 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, keep in mind that filing for bankruptcy without a lawyer isn’t easy. Bankruptcy laws are involved. If you aren’t willing to put in the necessary research time, you’ll risk losing unprotected (nonexempt) assets. Or, you might learn that none of your debts will be discharged in bankruptcy.

Also, 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 with a bankruptcy lawyer. If you’d like to file on your own, consider using a good bankruptcy self-help book.

(For step-by-step instructions on how to file for Chapter 7 bankruptcy, get How to File for Chapter 7 Bankruptcy, by Attorney Cara O’Neill and Albin Renauer, J.D. (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 find out about the services it offers or a list of free services or programs available in your area.

In most states, legal aid societies and pro bono attorneys provide free legal services or assistance to low-income individuals. Contact your local legal aid society, state bar, or local bankruptcy lawyers to find out about assistance 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. If you can’t afford to pay all attorney fees upfront for Chapter 7 bankruptcy, you might be able to stretch them out by filing for Chapter 13 bankruptcy.

However, this chapter doesn’t work for everyone. In general, Chapter 13 bankruptcy is for debtors who can afford to pay back a certain amount of their debts (such as mortgage arrears, car loans, or tax debts). If you don’t have enough income to afford to pay into a Chapter 13 plan, you won’t qualify.

Further, certain bankruptcy courts don’t allow Chapter 13 cases designed to pay only attorney fees through the plan. Other courts don’t automatically prohibit fee-only Chapter 13 bankruptcies but consider any special circumstances surrounding the case before making a decision.

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