How to Pay for Your Bankruptcy.

I am often asked: how a person is to come up with the funds to file bankruptcy? Of course, when you have reached this point, coming up with the legal and filing fees is often difficult. Difficult? Yes….. But also worthwhile and very possible.

The first thing to realize is that you can and should stop paying on dischargeable debt, like credit cards. Once you have made the decision to file, paying these creditors, for debts that will go away in your bankruptcy case, is a waste and you should of course save that money for the bankruptcy.

Secondly, although lawyers are prevented from encouraging people to incur debt to secure bankruptcy fees, it is legal and possible to do so. You can borrow the money from uncle Fred, list him as a creditor, and repay the money after the case is filed if necessary. You can also get gifts from friends and or family members and use those funds to pay for a bankruptcy.

Where necessary, a bankruptcy is a beautiful thing, and well worth the expense. The 2005 revisions to bankruptcy law made things a bit more involved for a bankruptcy lawyer, so competent lawyers will be charging more than in the past. The thing to keep in mind is that cheap lawyers are cheap for a reason, and they can end up being very expensive in the long run.

I heard a story recently which shows the futility of hiring a cheap lawyer to do your bankruptcy. A couple who lived in a home with no equity and who also owned a rental home with $50,000 of equity recently filed their bankruptcy case. Because they hired a cheap lawyer, one who has hundreds of cases going at a time and who does not do a good job on them, they were not told one crucial thing in their case. They were not told to move into the rental home before filing. That would’ve allowed them to keep the home in bankruptcy, and they could’ve moved back to their “regular” home later. It was a $50,000 mistake, born of greed and unprofessionalism on the lawyer’s part, and a desire to “save money” on the clients’ part.

In summary, meet a few bankruptcy lawyers before you make a decision, a quality lawyer will tailor the price to your situation and can help you arrange things so that the expense of the bankruptcy is manageable. I also routinely adjust fees downward for my brave clients that are battling chronic illnesses. I can be reached at (303) 670-4242.

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