Well, at least the initial consultation was free. But it was during that initial consultation that you were informed that the fee for filing your Chapter 7 was something which seems to be well beyond your financial grasp.
Some bankruptcy lawyers charge as much as $2,500 for an individual consumer Chapter 7 (perhaps more if the bankruptcy was somehow related to a business failure). Others charge as little as $500. I’m not sure why there is such a wide variation; but one thing is for sure — just as with consumer purchases, you probably shouldn’t shop based solely upon price.
And then there is the filing fee. The filing fee has increased in recent years. Not too long ago, the Chapter 7 filing fee was $209. With the change wrought by BAPCPA, it has risen to $299. Recently, the Chapter 7 Trustees were lobbying for an even higher fee. But honestly. $299? I am a lawyer, and that seems pretty darned expensive even to me.
BAPCPA also brought with it the infamous credit counseling requirement. Hummingbird, the credit counseling service that I normally steer clients toward, charges $49 per counseling session.
Filing a bankruptcy case can be very expensive; but of course, the cost of failing to file, against the advice of your attorney, is usually even more expensive. So what can you do to make all of these fees seem more affordable and/or palatable to your wallet?
First of all, assuming you are fairly committed to idea of filing a bankruptcy case in your very near future, you may wish to consider the cessation of all payments to your unsecured creditors. While you may still not have what we would call “disposable” income, this may, at least in the short run, free up some money with which you can begin making installment payments to your bankruptcy attorney.
But what if your financial picture is such that you haven’t made payments to your unsecured creditors in months, and you still don’t have the money to give to your bankruptcy attorney to get the case started? While not every bankruptcy attorney will be willing to consider this as an option to help you, some bankruptcy attorneys may ask you to submit all of your debt collection notices and letters to them for their review. Or they may ask you if offensive or misleading messages have been left on your answering machine, or if private information about you and your debts have been communicated to third parties. What they are fishing for is an FDCPA violation.
In Part Two of this message, we shall explore the impact of an FDCPA violation upon your ability to afford to retain bankruptcy counsel.
Bankruptcy Law Network (BLN)
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Last modified: October 22, 2012