Nothing Down Bankruptcy
Most of the bankruptcies I file don't require any up-front legal fees. The client only has to pay the Court fees, the credit bureaus for a credit report and for the on-line class. ($355 total for an individual, $375 for a couple)
*Don't get me wrong, I get paid and paid well, but it is through the bankruptcy process, not directly from my clients and pursuant to a Bankruptcy Court Order. I'm a firm believer in you get what you pay for and you will pay our office well over time. Here is my philosophy: If our office files you in a Chapter 13 bankruptcy and saves you enormous amounts of money, wipes out all or most of your unsecured debt and gives you a repayment plan that really works, then we get paid. If we don't and you don't succeed, we don't get paid. The payment is tied directly to the client's success. You win, we win. Here are some other reasons for not taking any money up front:
Not paying attorney fees up front can save you money if you are an above-median income Debtor.
Stopping a garnishment, rather than waiting to file until you have attorney fees will save you money.
Filing quickly can get back repossessed vehicles that would otherwise be lost because you couldn't afford to file.
There are occasions where it makes more sense to pay all or most of the attorney fees up front. Bottom line -- and all money stuff is about the bottom line -- make sure you talk to the attorney and compare the cost to savings and don't worry as much about what the attorney fees are. This is the most important formula:
Amount of Debt Owed > Attorney Fees
The first question most people ask about bankruptcy is "HOW MUCH DOES IT COST?" I understand why everyone asks this question. If you are in financial stress, affording an attorney seems like the last thing you could -- or should -- do. Attorneys are really expensive.
The real question should be :
HOW MUCH DO I SAVE?
This is our objective in representing you, to make it so you can afford our services and get the biggest bang for your limited bucks. Bankruptcy is a complete financial restart and attorney fees are only part of the picture. We will need to evaluate home loans, second mortgages, tax debt, child support, tax refunds, car loans, income, job stability, domestic stability, health insurance, long term financial goals and a host of other concerns that will determine in the end the total cost of the bankruptcy and the total savings.
One thing is certain -- The debt owed is always much larger than what you will pay in attorney fees.
1. Paying Attorney Fees Upfront Can Be A Bad Idea?
Personally, as the attorney, I'm a big fan of attorney fees, but I'm also a big fan of the idea that an attorney's job is to represent the client. Under the Bankruptcy Code, some clients actually benefit and pay up to $3500 less if they pay no attorney fees up front. If you are above the median income, an attorney who can wait for fees can save you money.
2. Second Mortgage Vanishes
I've had clients convinced that they should be doing a type of bankruptcy that won't allow them to get rid of their second mortgage. Yes, they may pay more in attorney fees in the long run, but in then end, the second mortgage will wiped out and they can afford to keep their home.
3. To Keep Or Not To Keep the Car
Many cases we file allow our clients to keep their cars and pay less than what they owe on the car, so much less in fact, that the entire bankruptcy costs less than what is currently owed on the car.
4. Chronic Health Problems Can Equal Chronic Money Problems
If you have chronic health problems that cause chronic money problems, proper bankruptcy planning is important so you can get long term financial relief, rather than just a temporary financial fix.
5. The Taxman Cometh
Unlike student loans (which we can only delay payment on), bankruptcy allows you to eliminate tax debt in some instances and pay without penalty in other instances. Proper bankruptcy planning relating to tax debt can save you thousand of dollars in penalties, interest or even, actual tax debt.
6. Personal Cashflow and the Garnishment
Garnishment is the financial equivalent of a sliced artery. You are bleeding money each paycheck and you need to stop the flow of blood. The last thing you may want to do is try and save up attorney fees to file when quick attention to stop the garnishment could save a lot of money.