It may seem obvious to some, but to most people, the issue of how to pay a bankruptcy attorney when they have no money to pay their debts is quite baffling. As the saying goes, you can’t squeeze blood out of turnip… or is it a rock? In either scenario, we all known no blood will spurt forth!
And yet, most attorneys will require payment (most likely in money and not blood) for their services, unless he or she is working pro bono (or pro bono publico — Latin for work for the public good, but don’t quote me, I haven’t used Latin since Angelina Jolie played Colin Farrell’s mom in Alexander).
So, how do people pay for a bankruptcy attorney? Check out how the famous financial adviser Suze Orman addressed the question:
I love Suze. When it comes to money advise, she truly speaks from a wise place. She makes great points about credit card debt but she never answers the question. In fact, I do think that, while she means well, Suze’s comments come from a place of judgment and makes the assumption that everyone is in the same situation, essentially that most people are judgment-proof, meaning that even if someone wins a law suit against them, no one will be able to collect money against them because they have no money to collect (like squeezing blood out of a turnip).
But as we all know everyone’s situation is different and you should consult with an attorney to see if bankruptcy is right for you. Even if all you have is credit card debt and you have no job, there may be good reasons for you to file anyway, beyond just the emotional and psychological relief that comes after all those collection calls stop.
To answer the question: If you don’t have money to pay for a bankruptcy attorney but you are sure you want to file for bankruptcy, talk to the attorney that you want to hire. They may offer payment plans that you can pay into.
You should know, that depending on the type of bankruptcy you are filing, most attorneys will require payment of their entire fee, plus the filing fee, before they start working on your case and most certainly before they file. This is because attorneys technically become creditors if you owe them money after you file and if you are filing a Chapter 7 bankruptcy they will not be able to collect on that fee post-filing.
The money for the payment plan may come from your earnings or savings (consider that if you are not paying credit cards anymore then you have a little extra per month to save towards your bankruptcy fees). Also, if you are expecting a tax refund that is a great way to pay for your bankruptcy costs.
What not to do:
1. Don’t borrow money to pay for your fees. When you file for bankruptcy, you have to list ALL of your creditors, including people who lent you money, not just Visa and MasterCard. Those people will not be able to recover their money and they may claim that you committed fraud if you borrowed without the intent to pay back. If someone is going to give you money for your bankruptcy fees then make sure they know it is a gift that they are not getting back.
2. Don’t use your credit cards to pay for your bankruptcy fees. Bankruptcy debt revolves around intent. If you knew that you were not going to pay off the debt because you were going to file for bankruptcy when you withdrew money then you are committing fraud and you are placing your ability to discharge your debt through bankruptcy in jeopardy.
It is always a good idea to speak with an attorney about your options in bankruptcy, including how to pay for fees, before you make any mistakes.