I am often asked by friends and colleagues, "how do you get paid when you file a bankruptcy for someone." Potential clients ask the same thing. It is a natural and reasonable question. If someone is declaring they don't have money to pay their creditors, where do they get the money to pay their attorney?
I try to be as flexible as possible when coming up with a payment plan for my clients. Very few have enough money put aside to pay all the legal fees and court costs at one time. One thing I will not do... file the case without being paid in full. This is a pretty standard stance in the field. If a bankruptcy attorney is not paid in full before filing, the debt owed by the client is lumped into the all other unsecured debt, such as credit cards and medical bills. Therefore, it becomes impossible to collect for the bankruptcy attorney.
However, despite this limitation, where there is a will, there is a way. The most common plan for my clients involves setting up a payment plan. Once a client retains me with some money down, I can begin to represent them by dealing with their creditors and preparing their petition. Payment plans can be as long as they need to be, and I will stand by my client the entire time. I will advise my clients on what bills need to be paid, and what bills do not. And I will always be available to answer questions.
Another common method to pay bankruptcy filing fees, at least early in the year, is to use a tax refund. This is entirely legal, and makes immediate payment (and filing) possible for many of my clients. The remaining refund can normally be exempted, so it is a win-win situation. Taxes are required to be filed before filing bankruptcy, anyways, so it is often a natural solution. It is something to keep in mind during tax season.
Third-parties, such as parents, spouses, siblings, and friends can also help with payments. This is not an option for everyone, and many of my clients are reluctant to ask for the help. However, when a Chapter 7 bankruptcy can save tens-of-thousands of dollars, it is usually help that close friends and relatives are happy to give. Getting help from friends and family to file a bankruptcy is preferable to continuing to struggle with debt and asking them indirectly for help with things such as child-care (while working a second job), or short-term loans that ended up not being repaid. It is something to strongly consider given the circumstances.
Contact us if you are considering filing a bankruptcy, but can't figure out how you would pay for it. I can help you consider which bills you will no longer need to pay, which may free up some money. I'll be happy to walk you through the situation and help you figure out a plan.