Free Clinics Legal Aid And Pro Bono Attorneys
Resources are available to debtors who can’t afford a bankruptcy attorney, but they vary depending on where you live. Some bankruptcy courts have free clinics to help debtors file for bankruptcy relief on their own. Contact your bankruptcy court to determine the services it offers or a list of free services or programs available in your area.
In most states, legal aid societies and pro bono attorneys provide free legal services or assistance to low-income individuals. Contact your local legal aid society, state bar, or local bankruptcy lawyers to find out about aid for people who wish to file for Chapter 7 bankruptcy but can’t afford an attorney.
What About Your Attorney Fees
Well if you stuck around this long its because you want to know how much WE charge. Well this is where its the hardest to give you an exact number without learning more about your case at a FREE CONSULTATION. Nolo says the current average is $1,200-$1,5000. Unless you have a complex or simple case, most of our fees are actually in the $800-$1,5000 range. We can usually give you a little better gauge over the phone of where you might fall but if you sit with an attorney for a free consultation youll get an exact number. We promise. The consultations are always completely free and youre under no obligation if we find bankruptcy isnt right for you.
Were also available if you have any questions about filing yourself, advertised attorney fees that seem too good to be true , and things you should look for in a bankruptcy attorney so you dont run into problems in the future.
Bankruptcy Filing Fees And Other Costs
Bankruptcy court fees depend largely on the kind of bankruptcy.
For both Chapter 7 and Chapter 13 bankruptcy, youll be responsible for paying fees just to have the bankruptcy court hear your case. These can include
- Filing fee The cost to file for Chapter 7 is $335, and $310 for Chapter 13.
- Credit counseling fee If you want to file for bankruptcy, youre required to receive credit counseling first. Many agencies charge a nominal fee for this service, which can cost around $50, according to the Federal Trade Commission. If you cant afford to pay, you may be able to get the fee waived.
- Additional fees You must take a debt education course after you file for bankruptcy in order to get a discharge. The cost can range from $50 to $100, according to the FTC. If you cant afford the fee, you may be able to get the provider to lower its fee or waive it completely.
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Filing Fees And Required Courses
First off, bankruptcy filers must pay a filing fee. For a Chapter 7 case, the fee is $335. For a Chapter 13 case, the fee is $310. The Bankruptcy Trustee may charge a fee of $15 to $20 when you file, as well. You may request to pay the filing fees in installments most courts will allow it if you can show it would be a financial hardship to pay all at once.
If you file under Chapter 7 and later convert to Chapter 13 , you wont have to pay any extra fee. However, if you file under Chapter 13 and later convert to Chapter 7 youll have to pay a conversion fee of $25.
Aside from the filing fees, youll be required to obtain credit counseling and take a personal financial management course. That generally costs anywhere from $20 to $100, depending on where you file.
How To Find Bankruptcy Attorney Costs In Your Area
The fees above are just averages, and fees have likely increased since the survey was conducted. In Chapter 13 cases, judges will review attorneys fees unless they fall below a so-called no-look amount, which is a baseline considered reasonable in the jurisdiction where the case is filed. But in general, its a good idea to call or meet with several attorneys before choosing one to represent you. Bankruptcy-attorney fees are public record and can be accessed through the searchable federal PACER website. Though PACER charges a small fee for downloaded information, it can be money well spent.
The cost of living where you file will also impact what you pay. Lawyers in large metropolitan areas, like everyone else, have bigger expenses than those in more rural settings. The higher cost tends to raise all professional costs, and bankruptcy representation is no exception. Also, not all lawyers were created equal. Those with many successful years in the bankruptcy field will almost certainly demand larger fees than those with little experience.
It is a good idea to consider the complexity of your case when picking a lawyer. If you have few assets and not many debts, your simple case might not demand the sort of representation that someone with a diverse source of income, a fat folder of creditors and perhaps a suspicion of fraud, might need. In other words, not all bankruptcies are the same. Remember that mulling the sort of lawyer you might need.
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What Are Other Possible Bankruptcy Fees
We now know that attorneys may charge more for complications. Your average bankruptcy case doesnt have any most are fairly straightforward. Youll file, youll either surrender your assets or work out a payment plan, youll get your discharge, and youll go on your merry way. However, not every case is so simple.
Bankruptcy isnt just about filing forms. Theres a lot of room for litigation, especially surrounding Chapter 7 exemptions. So, while attorney fees for an easy, open-and-shut Chapter 7 case will fall around $900-$1,500, most firms will charge more if court time becomes necessary.
For example, say the Bankruptcy Trustee objects to your valuation of some property you want to exempt. That question will have to be resolved in front of a judge. Your attorney will have to prepare a defense and appear in court, which will probably cost you a few hundred dollars extra. If someone files an adversary proceeding in your case , youre looking at a lot of research, preparation for a whole case, and plenty of court time. The bill for an adversary proceeding may well be in excess of $10,000.
Of course, these scenarios are relatively rare. Most cases proceed smoothly if you have a competent lawyer. However, the scenarios above are possible and you should be aware of them as you calculate the probable cost of your bankruptcy.
Using A Credit Card To Pay Bankruptcy Fees Can Be A Bankruptcy Crime
But wait, you might think, I have some room on a credit card. Maybe I can use that account to pay my fees. After all, Im going to discharge the account in the bankruptcy anyway. That way, the court and the attorney will get paid but it wont have to come out of my pocket.
Does this sound like a brilliant idea to you? If so, please rethink. What youre talking about is committing fraud. When you charge on your credit card with no intention of paying it back, youve committed fraud against your creditor. You can be prosecuted, fined, and serve jail time.
Most bankruptcy attorneys will not take a credit card to pay for fees unless that card is in the name of a party who isnt filing a bankruptcy case. If your parent, friend, or cousin paid the fees for you, your bankruptcy attorney may well be happy to run it as a charge on that persons account.
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Are The Fees I Paid My Bankruptcy Lawyer And Trustee Tax Deductible
Basic Information Bankruptcy fees paid to lawyers and trustees can be either a tax deduction or not and it will depend on the type of bankruptcy filed, Chapter 7 or 13, and on the items included in the petition. In order to take any bankruptcy expense as a deductible item on your taxes, you will need to file a Form 1040 and itemize your expenses. If you file using the short form, you will not be allowed to claim any itemized deductions.
Deductions Allowed by IRSRegular legal expenses for Chapter 7 and 13 bankruptcies and the filing fees, $299 for Chapter 7 and $274 for Chapter 13, are not deductible as defined in IRS Publication 908, the Bankruptcy Tax guide, which rules these fees as personal expenditures. However, if your attorney spends time communicating with the IRS regarding any tax issues you have those fees are deductible and will be listed as a miscellaneous expense on your Schedule A tax form. Any fees that you pay to either your attorney or an accountant for the preparation of your taxes while you are in a bankruptcy proceeding will be taxable itemized deductions on your Schedule A Tax Form.
Learn Bankruptcy Law And Procedure
You’ll need to become knowledgeable on federal bankruptcy laws, and the rules and procedures of your local bankruptcy court. For instance, Chapter 7 and 13 each have different qualification requirements and benefits. You’ll need to be sure to choose the best chapter for you.
Also, you must turn over supporting documentslike tax returns, paycheck stubs, and bank statementsand represent yourself at all mandatory hearings. If you don’t put in the time and effort into researching all necessary laws, rules, and procedures, you risk having your case dismissed without a discharge or losing your property.
Even so, it’s still possible to represent yourself in Chapter 7. If you’d like more information on filing on your own, an excellent place to start is with a comprehensive do-it-yourself manual, like Nolo’s How to File for Chapter 7 Bankruptcy, by Cara O’Neill & Albin Renauer.
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Attorney Fees Are Public Record
Thats right your attorney has to disclose her fees and theyre available to the public. You can research any bankruptcy law firms fees on the federal PACER website. PACER costs $0.10 per page viewed and you can search either by bankruptcy district to get a general sense of the fees in your area of by specific law firm to get an idea of what a particular attorney will charge. Local rules may require additional disclosure, but at a minimum attorneys must list their fees on the Statement of Financial Affairs, which requires a list of:
all payments made or property transferred by or on behalf of the debtor to any persons, including attorneys, for consultation concerning debt consolidation, relief under the bankruptcy law, or preparation of a petition in bankruptcy within one year immediately preceding the commencement of this case.
Chapter 13 No Upfront Attorney Fees
In most cases, we do not require you to pay the fees and expenses in advance because the fees and expenses are included in the monthly payments made to the Chapter 13 trustee. Court costs are normally paid prior to filing but in some cases may be paid in installments.
We invite you to a free consultation at one of our three offices statewide.
Shreveport Alexandria Lafayette
One of our experienced bankruptcy lawyers will sit down with you in a no-cost, no-obligation consultation to discuss your financial situation and options for debt relief. If you decide to go ahead with a chapter 7 bankruptcy filing or chapter 13 filing, the costs and fees are outlined below.
If you decide to retain us, the initial consultation services will be included in the fee quoted to you, which will be contained in a separate contract signed when you retain our office.
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Attorney Fees For A Bankruptcy Attorney
Attorney fees for your bankruptcy attorney arenât treated any differently in Chapter 7. This is why most bankruptcy attorneys require their clients pay them in full before filing their Chapter 7. Otherwise, they risk having their fees discharged along with the rest of the clientâs unsecured debts. In Chapter 13, however, a part of your attorney fees is paid through your Chapter 13 plan, so you donât need to come up with all the money upfront. This is an important aspect of Chapter 13 bankruptcy which as a rule comes with higher attorney fees than Chapter 7.
Ask Family Or Friends For Help
It’s hard to ask for help. You might feel uncomfortable telling your loved ones why you need the money. Many people find that when they ask for help, they have more resources than they ever thought.
Your attorney will need to know where the money came from because this must be disclosed in your bankruptcy paperwork. If its a loan, that person will need to be listed as a creditor. The loan will be discharged in the case, but that doesnt mean that you cant pay it back. If its a gift, it may have to be listed as income. Your attorney can advise you on this.
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Signs That You Need A Bankruptcy Lawyer
Financial distress rarely happens overnight or unexpectedly. Its usually a gradual process with several flare warnings going up that things are deteriorating.
When warnings are ignored, your finances can go up in smoke and its too late to do anything about it other than declare bankruptcy.
Some of the obvious signs that bankruptcy might be in your future include:
- You only make minimum monthly payments on overdue bills
- Your credit cards are maxed out and debt is growing, not shrinking each month
- You use credit cards to pay every day expenses like groceries, rent or utilities
- Youre paying overdraft fees each month
- Collection agencies are calling your house day and night
Withdrawing From Your Retirement Accounts Or Home Equity
This money will be protected when you file a bankruptcy case. If you use it to fund your case, you may incur penalties for early withdrawal or high tax bills. Using home equity loans can put your home in jeopardy if you have trouble making the payments later. The disadvantages outweigh the advantages of this approach unless you owe significant amounts of money that will be discharged.
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Here’s What To Do If You Can’t Afford The Legal Fees Of A Chapter 7 Bankruptcy Attorney
By Cara O’Neill, Attorney
Many debtors have a difficult time affording the fees charged by attorneys for Chapter 7 Bankruptcy. But payment options exist. If you can’t afford a Chapter 7 bankruptcy lawyer, consider whether one of the following might work for you:
- stop making payments on debts that will get wiped out in bankruptcy and pay your attorney instead
- borrow the fees from a friend, family member, or even your employer
- retain a bankruptcy lawyer who will handle creditor calls while you pay fees over time
- file on your own
- obtain assistance from a free clinic, legal aid society, or pro bono attorney, or
- file for Chapter 13 bankruptcy and pay attorney fees through your repayment plan.
You’ll also learn why paying your bankruptcy lawyer with a credit card isn’t an option. If you’re considering Chapter 13 as a way of financing bankruptcy fees, you’ll want to understand the differences between Chapter 7 and Chapter 13 bankruptcy.
Want step-by-step bankruptcy guidance? Read What You Need to Know to File for Bankruptcy in 2021.
Deductions For Business Bankruptcy
Businesses are allowed to deduct ordinary and necessary expenses. If a business files bankruptcy and tries to deduct legal fees for the bankruptcy filing, the business will have to show that the bankruptcy was ordinary and necessary, which is a complicated issue best saved for a CPA or a tax attorney.
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Home Mortgage Interest Deductions
The IRS allows a deduction for home mortgage interest paid during the tax year. The deduction is available only for interest paid on your residence or on a second home, and only if the mortgage was used to either buy the property, build the property or improve the property. If you refinanced your mortgage to get a better interest rate, you can’t deduct the interest. Similarly, if you refinance and get money from it, or if you get a home equity loan from the house, but you don’t use the money for improvements or repairs, the interest is not deductible.
If part of your Chapter 13 plan payment goes toward your mortgage, the mortgage company will apply some of the money to principal and some to interest, and at the end of the year, it will send you a Form 1098 showing interest paid. You can use that form to deduct the interest on your taxes. For example, if you’re behind on your mortgage and you’re paying the trustee $5,000 per month through the plan, and she pays $2,000 of that amount to your mortgage company every month, and $500 of that is interest, you’ll have paid $6,000 in mortgage interest that year, even though the money is going through the plan.
Additional Costs And Fees: Chapter 7
In addition, the last three years of tax returns must be provided to the Chapter 7 trustee overseeing the case.
But, we can track down your tax information for you for no extra charge.
To clarify, the only payment that is made is the $13 charge to the IRS to order a tax transcript directly from them.
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Find Out More Information About How Our New York Bankruptcy Attorney Can Help You
When you are selecting the right bankruptcy attorney, fees will likely be an important factor. You should not have to overpay an attorney to handle your case, especially since you are already facing financial issues. If you think certain quoted fees are too high, you should always consult with another experienced bankruptcy attorney to compare. That being said, it should also concern you if a bankruptcy attorney is charging too little to handle your case. Law firms that charge budget rates often complete budget work and your case may not receive the attention it deserves so that you receive the most favorable results possible. Low fee advertisements can also be deceptive and you may learn the cost is greater later on in your case. At the Law Office of Ronald D. Weiss, P.C., we charge reasonable fees for the highest quality of work on your bankruptcy case in and around Long Island, Suffolk, and Nassau. We fully understand and comply with all laws regarding disclosure of the fees you pay so that your rights against overpayment are protected. If you are considering bankruptcy and would like to discuss the specifics regarding a potential case and fees, please call us at 631-271-3737 or email us for a free consultation.