September 29, 2011

Is Filing Bankruptcy Worth the Money?

Posted in Bankruptcy tagged at 1:58 pm by demetriagraves

Obviously, if you’re considering filing for bankruptcy money in your household is probably tight. You may be struggling to come up with gas money to get to work or buy groceries let alone coming up with money to pay a bankruptcy attorney. People often ask me whether it worth the money you pay a bankruptcy attorney to file your bankruptcy case. Seeing that I am a bankruptcy attorney my answer may be biased, but usually when I lay out what you get for the fees you pay, most people see that it is a pretty good deal.

Before you can know whether it is worth it or not, you need to know what your bankruptcy is going to cost you. If you have called around to ask bankruptcy attorneys what they charge you were likely surprised to learn that many won’t tell you what they charge. I know this is very frustrating for clients. Imagine going to the store to buy a new TV only to have the store clerk refuse to tell you what the purchase price of the TV is! It is a little different when it comes to legal work. The main reason is without sitting down with you and going over all of the facts of your case it is difficult to determine how much work is going to be required and what the corresponding price will be. Plus there are court filing fees and some other costs which add to the total price.

So what does your money get you? Firstly, the bankruptcy process is much more complex than many people understand (even some attorneys). There are many pitfalls that can cost you big time if you don’t understand the law or the process. Hiring a bankruptcy attorney helps you to avoid the problems that can arise in a bankruptcy case. Further, hiring an attorney will put a buffer between you, your creditors, and the bankruptcy trustee. Instead of you having to deal with legal issues that will arise in your bankruptcy case, your attorney will handle all of that for you. And finally, you get legal counsel to assist you for the entirety of your case. In a Chapter 7 bankruptcy you will have counsel for approximately 6 months.

Often bankruptcy is cheaper than settlement. Many of my clients have tried to settle their debts prior to resorting to a bankruptcy filing. They find that most credit card type debts will agree to take less than what is owed, or “settle” the debt. Usually the credit card company will want 45% up to 75% of the total amount owed to settle the debt. So if you owe $30,000 in credit card debt, you would need to pay $13,500 up to $22,500 to settle these debts.

In a Chapter 7 bankruptcy case you can eliminate credit card completely. However, you have to pay an attorney to help you through the process. Though, this is usually significantly less than what a settlement amount would be. I realize that it is a sacrifice for many people to put together the money to pay an attorney to assist them through the bankruptcy process. At the same time, when compared to other ways of reducing your debt, hiring a bankruptcy attorney is a bargain.

If you would like more information on what filing bankruptcy costs and if this is the right solution for you, I offer a free 30 minute telephone consultation, where you can get all you questions answered.

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