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.
"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.
|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.
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.
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.
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
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.
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.