- advertisement -
 

Affordable legal help for bankruptcy

It's a dilemma: You're so broke that you have to declare bankruptcy, but the experts say you should hire a lawyer and they cost more than ever. That's become especially true since the bankruptcy law was changed, introducing new complications to the process.

- advertisement -

"Many bankruptcy attorneys hiked up their fees by at least 50 percent," says Henry Sommer, president of the National Association of Consumer Bankruptcy Attorneys.

The rise in fees has left many broke consumers wondering whether legal help for their bankruptcies is even an option.

Bankruptcy filers might have to fork over $1,200 to $2,500 to get most of their debts erased in a Chapter 7 liquidation bankruptcy. Consumers deemed able to pay back creditors in a Chapter 13 repayment plan may have to scrape up $1,500 to $3,500.

Attorneys argue that changes in the law have piled on paperwork, making preparations more time-consuming. They have to do additional "homework" for their clients because if anything goes wrong, such as a missing document or providing inaccurate information, the lawyers are held more accountable.

Legal expenses
Going through bankruptcy can mean paying expensive legal fees, a tough chore when you're already broke. But most experts agree that you do need an attorney, particularly with the new bankruptcy law.
Ways to reduce the cost:
1.Add attorney payments to the case
2.Reduced fee and pro bono attorneys
3.Limited scope legal representation
4.The pro se desk
5.Other resources

Some consumers opt to cut out the cost of an attorney altogether by representing themselves, a process known as pro se. Bankruptcy experts warn against this. They say the law is too complex and these pro se debtors could have their case kicked out of court because of a mistake.

Filing becomes even more expensive when a case is dismissed. The case must be refiled and the law is less forgiving the second time around.

Debtors can consider five methods to lower their legal costs.

1. Add attorney payments to the bankruptcy case
Sommer explains that debtors can stop making payments on certain debts, such as credit cards, in order to pay for a bankruptcy lawyer. The attorney can identify which bills the consumer can stop paying based on an overall assessment of that consumer's level of debt.

The lawyer, he says, can also be paid through the repayment plan in a Chapter 13 bankruptcy. 

A debtor who does decide to retain a lawyer should choose carefully, asking the right questions and assembling the proper documents.

2. Reduced fee and pro bono attorneys
Many attorneys offer free consultations, according to Sommer.

Some attorneys such as Howard Rothbloom, in Marietta, Ga., provide services at a reduced fee.

Rothbloom occasionally receives clients through the Atlanta Legal Aid Society and charges them several hundred dollars. Most clients, he says, are elderly and struggle with predatory and abusive mortgage loans. Other clients are people who are or have been ill.

Getting connected with a reduced fee or free lawyer through legal aid services is an option, but the services are limited due to lack of funding, warns Barbara Moldauer, spokeswoman at the U.S. Legal Services Corp., a federal agency that funds and monitors free civil legal aid.

 
 
Next: "We call them peace of mind bankruptcies."
Page | 1 | 2 | 3 |
 
 RESOURCES
A bankruptcy timeline
9 bankruptcy costs to know about
13 tips to avoid hiring a bad attorney
 TOP STORIES
No stories available
 



Compare Rates
NATIONAL OVERNIGHT AVERAGES
$30K HELOC 4.38%
Personal loan 13.95%
$30K Home equity loan 4.98%
Rates may include points
RELATED CALCULATORS
  Loan calculator (includes amortization schedule)  
  See your FICO score range -- free  
  What will it take to pay off your credit card?  
VIEW ALL  
FINANCIAL LITERACY
Rev up your portfolio
with these tips and tricks.
- advertisement -
- advertisement -