Too Broke For Bankruptcy

Recently I have encountered from numerous sources, the fact that many Americans in need of bankruptcy protection, cannot afford to file.  Obviously there are costs involved with any legal process, and in today's economy money is tight for many.  It is clear why some would think that bankruptcy is just another thing that they cannot afford.

The average cost in the United States associated with filing a chapter 7 bankruptcy is roughly $1500, including attorneys fees.  In some cities the cost is higher than others.  To file a chapter 7 bankruptcy, there is a court fee of $306, in addition to the court fee, debtors must receive a court approved certification that they have completed credit counseling and a debt management course.  Fees for such courses range from $15 to $50.  Depending on the qualification and experience of attorneys and the type of service you hope to receive, attorneys fees can range significantly.

Before ruling out filing bankruptcy, individuals who need the protection but believe they are too broke to file, should consult with an attorney.  There are  many attorneys who will take a pro bono case and others who are flexible with payment plans.  An attorney can assess your situation and determine if your case will be simpler than average or more complicated.  The experienced attorney can usually determine with some certainty how much time will be spent on any given case.  This may result in a reduction of fees when a case is simple. 

Some more complicated cases may result in the filing of a chapter 13 plan.  Where a debtor is employed and a budget can be carved out of the income, chapter 13 plan payments can be used to pay attorneys fees.  Many chapter 13 attorneys are willing to file cases with little money up front, as long as they perceive the case as having the ability to succeed.

Even a debtor who chooses to file pro se (without an attorney), has resources available to assist with filing.  The Colorado Bar Association hosts two pro se clinics each month at the United States Bankruptcy Court in Denver.  There, qualified consumer bankruptcy attorneys lead a clinic advising pro se filers of what they need to know in order to file their own chapter 7 bankruptcy.  They advise of the common pitfalls and mistakes to avoid.  The attorneys at the clinic answer individual questions and often are happy to answer specific questions, and will advise an attendee to at least consult with counsel if their situation seems complicated or one that could cause them trouble.

Most bankruptcy attorneys offer a free initial consultation.  Attorneys that do not, expect that if a fee for consulting is paid, then the client already has a vested interest in returning to that attorney.  I am of the opinion that when choosing a bankruptcy attorney trust should be established and if your gut tells you to run the other way, go with your gut.  A free consultation is a good way to force you to come to terms with your current situation, assess the situation with a qualified attorney, and determine your ability to pay for future bankruptcy services. 

Often times someone in financial distress cannot look beyond their current inability to pay.  I have met with countless clients who have stopped opening bills.  If the consultation is free, there is no obligation to file the bankruptcy or hire the law firm (no matter how much pressure one may perceive).  An experienced attorney can advise a debtor of his options with respect to bankruptcy.  The attorney can often hold off collection actions while the debtor saves up for filing bankruptcy.

In some cases, a debtor may qualify for the waiver of the court filing fees and the costs of the credit counseling.  For debtors who qualify for the waiver of the court filing fee, it is likely that the same individuals could find an attorney who would take their case pro bono (free) or would at least waive the majority of their fees.

If cost is keeping you from consulting with an attorney, take advantage of a free consultation with a bankruptcy attorney.  Perhaps it is better than you think, but even if it is not, the sympathetic attorneys at Greenwald & Hammond, will work with you to try to make bankruptcy an option.  Call us today for a free bankruptcy consultation.

Submitted by:

Mindy Greenwald, Esq.
Bankruptcy Attorney