You might wonder how you can afford to pay a bankruptcy lawyer if you are unable to pay your other bills. If so, you are not alone. But the cost of retaining an Orlando bankruptcy lawyer may be more reasonable than you think. It is, however, important to understand how a bankruptcy lawyer is paid. After all, if you are contemplating bankruptcy, the assumption is that you have limited funds and are unable to pay most of your bills.
First, Decide What Type Of Bankruptcy Case You Are Filing
The type of bankruptcy protection you are using makes a big difference in your lawyer’s options for charging and collecting his or her fees. There are two types of bankruptcy cases that individuals typically file. Each has its benefits and limitations.
Chapter 7
In a Chapter 7 bankruptcy, you are asking the court to discharge everything that is not secured by an asset. This is the “clean slate” type of bankruptcy, which eliminates all debts than can be discharged and lets you start fresh. However, you must qualify based on state-specific income rules. Not all debtors will qualify. Once you file the case, the Court will put an automatic stay in place, which prevents anyone from attempting to collect debts. Therefore, if your lawyer files the case without you paying the whole amount of fees upfront, then your lawyer is now also prohibited from collecting his fee. For this reason, lawyers typically will require you to pay the entire fee upfront.
Chapter 13
In a Chapter 13 bankruptcy, you must establish a repayment plan, through which your debts are often reduced, allowing you to pay less than the full amount and not all of them. In essence, Chapter 13 acts much like a debt consolidation plan, whereby you make regular payments to a bankruptcy trustee, who in turn pays creditors a percentage of what they are owed over a set period of time. During the process, you will not be able to borrow or take out loans without the court’s permission. Because this type of case involves continuing to make payments, your lawyer is able to include some of her fees in the repayment plan. There is a risk involved for the lawyer, because if the debtor fails to make payments, then the fees may be difficult to collect. Nevertheless, there are some lawyers who will consider these payment options.
What if I cannot pay upfront?
The practical answer is that almost everyone considering bankruptcy can afford to pay lawyer’s fees. Consider for a moment how much you pay your creditors every month. Then ask yourself how much you could put back each month if you simply stopped paying your bills. It may seem odd to be told not to pay your bills, but if the goal is to discharge the debts, then you will not be paying the creditors anyway. Many debtors find that by saving the money they typically pay their creditors, they are able to quickly come up with the lawyer’s fees needed to file their case. Remember, bankruptcy is there for a reason, and everyone deserves a second chance.
Many people opt, at this time of year, to file their income taxes and to use their refund to pay their filing costs and legal fees from those funds.
If you need assistance with bankruptcy in Orlando, don’t hesitate to reach out to Amy E. Goodblatt today for help. Our office is prepared to guide you throughout each of step of the process to financial stability.
Our attorneys, Amy E. Goodblatt and Tatiana Leo, have more than 55 years of combined legal experience. They are directly involved in each case and stay focused on the issues that matter most to you.
