In the previous Parts 1 and 2 of this blog, we covered what bankruptcy fees you will be required to pay if you file, and what an attorney may cost as well as why it costs this much. In Part 3, the final section, we cover ways for you to pay those costs and what you can do if you are truly unable to pay certain required costs. If you are considering filing for bankruptcy, you need to understand the fees you’ll have to cover and what the full cost of a bankruptcy case of any chapter may be. Behm Law Group Ltd. provides expert bankruptcy assistance in New Ulm, MN, and the surrounding area.
While there are many costs involved in the bankruptcy process, and we understand that attorney fees can seem daunting, there are many ways of covering those costs.
How to Pay
If you can, you’re certainly able to pay bankruptcy fees and attorney costs with one lump sum. However, some people are not able to pay the fees and costs in full and all at once. This makes perfect sense since they are in dire financial circumstances that are requiring them to file for bankruptcy debt relief in the first place. For those who cannot afford the fees and attorney costs up front, there are other ways to pay.
- Payment plan: If you are filing for Chapter 7 bankruptcy, you can generally set up a payment plan for the attorney’s fees and court costs. An installment plan can be established as long as your fees are paid in full before your petition is filed and in a minimum of four installments. Any bankruptcy attorney who is decent and worth hiring will not agree to file your bankruptcy case and then agree to accept monthly payments from you. Such an arrangement is highly irresponsible and unethical because the same attorney helping you through your bankruptcy would become one of your creditors. Also, any credible attorney worth hiring would not expect you to ask a friend or relative to sign a personal guarantee for the payment of your attorney’s fees and costs. Such an arrangement is also highly unethical and extremely inappropriate because it allows the attorney to legally pursue the friend or relative if you fail to pay. Such an arrangement essentially allows the friend or relative to be drawn into your financial vortex of misery and that is simply not right.
- Waivers: For the bankruptcy court filing fee, you can request a waiver of the requirement to pay it. To qualify for a waiver, your income must be 150% under the federal poverty line and you must not be able to pay the court filing fee in an installment plan. However, bankruptcy courts are generally extremely reluctant to grant such waivers because the bankruptcy court filing fees help fund the entire bankruptcy system from bankruptcy judges to bankruptcy court law clerks to bankruptcy court staff and more.
- Pro bono: Attorney costs can be high for those who are unable to meet the basic bankruptcy fees, but there are some lawyers who occasionally set aside time in their schedules to offer legal aid for free to those who truly cannot pay the attorney’s fees and costs themselves or are unable to rely upon other resources such as friends and relatives.
- Legal aid: Government legal aid is offered nationally for individuals who cannot afford an attorney. While these legal aid offices provide guidance and important information, not all of them will offer bankruptcy filing assistance.
- Friends and family: When all else fails, most filers can turn to their loved ones for financial support. Keep in mind that family debts must be disclosed in your bankruptcy if there is a legal contract or other official documentation or even if there is a non-written expectation that you should pay them back.
- Borrowing from a 401(k), IRA or Life Insurance Policy: Sometimes people can borrow against their retirement plans or cash value life insurance policies to acquire the necessary funds to pay their bankruptcy attorney’s fees and bankruptcy court filing costs.
- Employer Provided Legal Insurance Plans: As part of a benefits package for their employees, some employers offer legal insurance plans such as ARAG Legal Insurance. Typically, legal insurance plans will pay up to $2,000.00 towards bankruptcy attorney’s fees. However, you must still pay the bankruptcy court filing fee of $335.00 for a chapter 7 case or $310.00 for a chapter 13 case.
Some filers also sell some of their possessions that will be exempt from the bankruptcy process, such as electronics, antiques, furniture, jewelry, and so on in order to pay for their attorney’s fees and bankruptcy court filing costs.
Filing for bankruptcy should be the opposite of a financially crippling experience. Because of that, there are many ways to pay the required fees and to get legal aid. To learn more about receiving bankruptcy assistance in New Ulm, MN, contact Behm Law Group Ltd. at (507) 387-7200 or stephen@mankatobankruptcy.com.
