If I Can’t Pay My Bills, How Can I Afford to Pay My Bankruptcy Attorney – One Solution

by Jill Michaux

October 7, 2007

My clients assign their income tax refunds to me for my bankruptcy attorneys fees. This is one solution to the frequent question, “If I can’t pay my bills, how can I afford to pay my bankruptcy attorney”.

We file many chapter 13 bankruptcy cases with no money paid to us in advance. The filing fee is paid in installments. Our fees are paid in monthly payments through the chapter 13 trustee as part of the plan. In addition, we take an assignment of our client’s income tax refunds and get paid the tax refunds when they are received.

Using this solution, the only money many of our clients need up front to get a chapter 13 bankruptcy case started is the fee to get the credit counseling certificate ($25-49). By filing the bankruptcy and invoking the automatic stay, we stop the garnishment of wages and bank accounts, end the vicious cycle of payday loans and overdraft charges, cancel automatic bank withdrawals and take back control of the money so our client can successfully carry out his chapter 13 plan.

When using Kansas exemption laws, tax refunds are not protected from creditors in bankruptcy. Our client is able to pay us out of money he will lose in bankruptcy. Tax refunds are forfeited to the bankruptcy trustee if not paid to us for our fees. See my previous post about a recent decision by the U.S. Bankruptcy Appellate Panel for the 10th Circuit declaring “It was creative bankruptcy planning by debtors and their counsel to assign their income tax refund pre-petition to pay their attorney’s flat fee retainer.”

This is one type of arrangement for payment of bankruptcy attorneys fees. Not all attorneys offer this plan and not all clients qualify for it. We generally require full payment in advance to file chapter 7 cases.

See Steve Otto’s posts for other ideas on how you can afford to pay your bankruptcy attorney.

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Jill Michaux has helped Kansas consumers with debt problems for three decades. She and her partner, Mark Neis, are Topeka's only bankruptcy specialists, board certified in consumer bankruptcy law by the American Board of Certification. She help start the National Association of Consumer Bankruptcy Attorneys.

Last modified: October 22, 2012