Unfortunately, some people try to file their bankruptcy without an attorney simply because they feel they can not afford the attorney fees. Nothing could be more potentially detrimental to your bankruptcy outcome than filing without an attorney or using a cheap attorney.
In Chapter 13, the Court first pays the attorney fees and court expenses as administrative claims. Then priority debts such as income taxes less than 3 years old, alimony, and child support are paid. Then secured creditors such as your home mortgage and car loan are paid, Unsecured debts are paid last.
Whether you hire the best or worst attorney in town the court pays the same flat fee to each attorney in a 13. If you hire someone with less experience in A Chapter 13 you just get someone with less experience. You don’t reduce your plan payments. You just get worse advice. If you file your own chapter 13 then you just pay the creditors more.
Here’s how it works. Your plan payments must pay what Chapter 7 would have repaid. It must repay the priority and secured claims and must repay any disposable income.
Do You Think You Can’t Afford Chapter 13 Attorney Bankruptcy Fees?
⎆ The order of bankruptcy fees payout.
Claims are paid in the following order:
- Administrative claims: Trustee, attorney fees, and court costs.
- Priority claims: Taxes less than three years old, alimoney and child support claims.
- Secured claims: Car and home loans and mortgages. (Normally, second auto, boat, motorcycle, and four-wheelers are viewed as a luxury and not allowed; but small balances may be allowed.)
- Unsecured debt: Student loans are not normally dischargeable, but they are unsecured claims — not priority claims. They are normally paid pennies on the dollar in Chapter 13 and paid last, which requires special planning for these debts. (Medical bills and credit cards are unsecured claims.)
If you file Chapter 13 on your own, know this. Poor and incomplete petitions cause bankruptcy debtors to lose money, property, or spend additional stressful time in court. The Trustee is paid 70 dollars for each petition he reviews and from 25% to 10% of any property, he can sell.
⎆ What you need to know to file bankruptcy effectively.
How do you properly file exemptions to keep the property you own or how do you compute the means test? That and 1000 other rules are what you need to know to prepare a good petition. The Bankruptcy Code is a complicated federal statute that involves technical terms, accounting principles, and rules of law that even non-bankruptcy attorneys have trouble understanding. It refers to other codes such as the IRS code in determining whether student loans and income taxes can be discharged.
In 2006 over half the attorneys who were filing bankruptcy cases quit because it became so complicated. Since the 2005 amendments, it has become even more complicated. So, if the average attorney can’t properly file bankruptcy petitions, why do some people think they can use a cheap attorney or file without one? Sure some people do it. But, you are taking a huge chance with your future. Instead, hire a good attorney.
⎆ The panel trustees.
Do you know that the job of a Chapter 7 Trustee is to take your property away? That’s right. He represents the creditors, not you. This is the snare those who file their own bankruptcies fall into.
Unfortunately, when a debtor prepares their own Chapter 7 case, it often unravels. If the property was not properly mortgaged the property can belong to him. That’s when the Trustee just smiles while he takes the property of a debtor who didn’t use an attorney who checked whether or not the car lien was properly filed.
⎆ Paralegals don’t give advice.
A paralegal is not supposed to offer assistance because offering advice is practicing law without a license. Furthermore, a paralegal usually doesn’t know whether or not you will lose property and only works under the supervision of an attorney. On the other hand, an experienced bankruptcy attorney reviews the debtor’s financial file.
He then obtains documents to ensure security interests are properly filed and that property did not improperly transfer. The junior attorney is supposed to work underneath a more experienced attorney. However, in a bankruptcy mill, they rarely check or the head of the law firm doesn’t spend time with you checking that your goals are being met.
⎆ A good attorney is worth the bankruptcy fees!
A good bankruptcy attorney doesn’t always meet every client’s demands. You probably won’t get a free home. But, a good bankruptcy attorney advises you and warns you about potential problems like the possible loss of a home. That’s in addition to outlining in detail the steps you should take to get benefits less experienced attorneys miss.
It’s worth the time and money to have an attorney with experience help you plan and file. Some Debtors try to save money by hiring a cheap lawyer. But, often they end up having it cost a lot more work, time, and property. The simple fact is, you can’t afford to file by yourself. No one can.
Instead, always hire the best, most experienced attorney you can find, especially in Chapter 13. As of 2022, attorneys in Western Kentucky Chapter 13 cases are paid a flat fee of $4,100 by the court in the Western District of Kentucky. In Southern Indiana, it is $4,000; in Eastern Kentucky, it is $3,750. Most offices now charge in 2022 1400 for a single uncontested Chapter 7 and 1600 for a joint uncontested petition. So, please be aware that if you shop for a low-cost Chapter 13 attorney, you simply get one with less experience and knowledge and then pay the unsecured creditors more.
Resources for Bankruptcy
Louisville Kentucky Bankruptcy Forms
Chapter 7 Attorney Fees in Louisville Kentucky
Bankruptcy Attorney Fees and Costs in Louisville Kentucky
Why Review a Chapter 13 Schedule of Allowed Claims?
If you are thinking about filing bankruptcy, don’t delay because timing is crucial. I am here to help you. So, contact my office right away to start the conversation. Nick C. Thompson, Bankruptcy Lawyer: 502-625-0905.
