It's expensive to go broke! "A Chapter 13 costs $3,000. Your lawyer will probably want part of that up front, with the rest paid off as part of the plan. A Chapter 7 goes for about $1,200." Yikes. If you're considering bankruptcy and looking for a little guidance, this article from the St. Louis Post-Dispatch is a good place to start. [Post-Dispatch]
Post a comment
Comments:
I wonder how many bankruptcy lawyers would let you pay this with a credit card?
Then again, the cost to just run away from society and become a vagrant is much, much cheaper.
While drifting, I recommend slaying monsters and selling what they drop to nearby towns until you can afford better equipment for slaying tougher monsters which, coincidentally, provide better drops.
@TracyHamandEggs: If you can find a bankruptcy attorney who will file a Chapter 13 (note that the quote says a 7 "goes for about $1,200" which fits in your range) for less than the court-allowed maximum in the plan, they need to advertise better. In the Dallas area, the few (very few) attorneys still doing BK all charge the max $3,000 allowed by the court for a 13.
I know a couple that had this problem last year -- they couldn't afford the lawyer for a bankruptcy or a divorce. It's difficult being sympathetic to complaints like that, but it didn't stop the wife from complaining to everybody.
They finally managed the bankruptcy a couple months ago. Still married, though. If I have to keep hearing about that, I may take up a collection to pay for the divorce lawyer.
@Applekid: Also, make sure to hang out in lots of inns and backrooms, there are usually people willing to give you quests to go on there, some of which pay well, though they involve slaying very tough monsters.
Some lawyers (like me) do Chapter 7 bankruptcies for $650.
@TracyHamandEggs: Yes. Also, we tend to base fees on an estimation of what the client can afford and the time that we'll have to put into it.
I used to work for a bankruptcy lawyer. He was charging $950 for a Chapter 7. Guess who was doing all of the work for $6.25 an hour? Yup, me. I prepared all of the paperwork (summary, schedules, statement of financial affairs, etc.). He kept telling me he couldn't give me a raise because he wasn't making much money. I did the bookkeeping; I knew he was just being cheap.
About 4-5 years ago, I declared Chapt. 7 myself. I'm a changed man since then, but that is a different story.
I filed pro se (I was on my own, no lawyer) and everything went fine. As long as your financial situation isn't very complicated, and you follow all the rules and forms carefully, it really isn't that bad.
Granted, I had no real assets besides a car, and very little income, but it only cost me $250 plus a day off to go to the creditor meeting.
The creditor meeting might sound scary, but most typically don't show up, and after telling the judge why you need to declare bankruptcy, and swearing that you have disclosed everything, you are free to go.
To second @TracyHamandEggs:
Our bankruptcy in 2005 cost $1,500 in legal and filing fees. Our lawyer was awesome, too. And, for obvious reasons, we were able to pay it off in installments.
A friend of mine went with one of the McBankruptcy places and had a horrible time. It was more than worth the money to do it the right way - research, interview, and then hire a real lawyer.
@medic78: We filed about nine years ago due to medical debt. The lawyer really didn't do much. I filled out all the schedule information and handed that over to his legal secretary. He showed up with us at court and did nothing beyond state that he was there.
Looking at all the online information on the .gov page, most people with a grasp for doing taxes or bookkeeping could do this.
When a person decides to file for Chapter 13 or even Chapter 7, it is in their best interest to do research on the subject first and interview as many attorneys as possible to determine who will be the best fit for you. I found my lawyer online - through various blogs and his own personal site. I compared what he offered to other attorneys in the area and ultimately picked him for my Chapter 7 because it was what was right for my wife and I at the time.
Over the course of the whole process, which began the 3rd week of June, I learned a lot. Ultimately what I drew from the experience was that you need to do a lot of homework, and ask good questions up front. Don't be afraid to contact your attorney with what may seem in the end like stupid questions - you may even bring up something new to him (or her). I had a lot of bankruptcy mythology debunked just in the first two meetings with the attorney.
I think the scariest part of the filing was the meeting of creditors. We did not know what to expect, and many online repositories showed bias either towards hating it or it being a cakewalk. Our experience was somewhere in the middle. The building we had to go to was in a BAD part of town and we had to park quite a distance away and walk. My wife has RA and it wasn't good on her bones - she refused to stand inside alone and wait for me.
Once we arrived for our meeting, our attorney was late. Maybe 20 minutes before we were called before the trustee he finally showed up - in jeans and an untucked polo. He pretty much told us we had nothing to worry about. My wife freaked, I was a bit upset, but we came through the experience alive and as a previous commenter mentioned all I was out was a day of work. I found out several months later that my case was discharged and eventually closed. If my wife trusted me with legal documents, we could have filed for only $250 and been done, but in the end we spent close to $800.
I declared bankruptcy in 1995, and did all the paperwork myself. Of course, things may have changed since then.
One important thing they don't mention is, especially with a Ch. 13 (and in most states you don't get to decide between 7 or 13; it's whichever you qualify for -- people with higher incomes and more assets have to go 13), know BEFOREHAND that the bankruptcy will actually FIX your problem. It won't affect your mortgage or car-lease payments, for example (though in some states, again, it will let you give the car back to get out of the lease -- and a rare few lawyers might be able to work a loan modification into your bankruptcy, but ask about that specifically if you need it, before writing a check). With a 13, you'll be ordered to pay approx. 15% of what you owe all your creditors, divided up evenly over 3 or 5 years. If you can't make that monthly payment PLUS housing and your usual expenses, then a Ch. 13 is WASTING YOUR MONEY.
Also, please GOD don't listen to the lawyers saying they can "save your house" with a Ch. 13. Filing a Ch 13 bankruptcy (if you qualify for one, remember) will stop a foreclosure proceeding TEMPORARILY, but after the bankruptcy is over you'll be right back where you started, PLUS the additional payments and fines. And you'll have ruined your credit with a bankruptcy!
*pantpant* Okay, off the box now.
@Mary Marsala with Fries: I can't vouch for a Chapter 13, but after my Chapter 7 I noticed an improvement on my credit score. Overtime it will only get better. I know, though, that it will be there for ten years for all to see.
@ChrisC1234: No reputable attorney will take a credit card for bankruptcy fees. The rules prohibit it.
As for taking a cash advance - no, no, no. If you take a cash advance and don't intend to pay it off, it's fraud.
We've always offered installment payments on fees; the standard advice is to cut up the cards, then pay whatever you were paying on the credit cards toward the attorney fees.
Also, beware of comparing cases filed prior to October 2005 to a case filed today. The change in law doubled the work needed to do a bankruptcy, and fees have gone up accordingly.
Thats just plain wrong. You can declare a BK for $1000-$1600, with a reputable lawyer. And that includes court cost.
Do not use BK "houses" or a paralegal to do it on the cheap.