How Much Does it Cost to File Bankruptcy?

                                     How Much Does it Cost to File Bankruptcy?

                                                    
            
            Bankruptcy costs include three basic components:   
                               (i) The filing fee due to the court, 
                               (ii) the costs associated with third party reports and searches, and 
                               (iii) attorneys’ fees.

The first cost, which is the filing fee due to the court is either $306 for a Chapter 7 Case or $281 for a Chapter 13 Case.    These costs are set, but a filing debtor can elect to pay in installments or even to have some or all of it waived in extreme situations.

The second cost includes the bankruptcy classes which you are able to take online. (Click here for an approved list of providers in Georgia).  One class, the debtor pre-filing counseling course, is required before you file, and usually costs around $25.   The other class, the debtor education course, must be taken before you get your bankruptcy discharge. This is usually around the same fee.  

 In addition to these fees, a careful and diligent law firm (like we are at The Slomka Law Firm) will run asset searches and judgment lien searches to make certain that your bankruptcy filing includes all debts and discloses all assets.   These searches also add costs to the process, but are paid by our law firm as part of the fee.   These third party costs also include mailing, postage and service costs for all of the papers we must deliver to all of the creditors and parties associated with your case.

Finally, your attorney is entitled to attorney’s fees for the time to prepare the case, represent you in court, attend hearings, contact creditors and trustees, and to do all other work required to get your discharge.    In most cases the attorneys' fees will run in the neighborhood of $1,000.  At The Slomka Law Firm, we allow the fee to be paid over time and we are open to favorable payment plans.

In most cases, with typical debts and creditors, a client can expect to spend about $1,800.00 (certain costs additional) for the total of all of these costs to get the full bankruptcy discharge.  Some cases are more and some are less, but I invite all clients to come visit so we can fully and openly explain the process and all costs.

References: http://www.slomkalawfirm.com/Chapter-7-Basics/Cost-of-Chapter-7.shtml
http://www.justice.gov/ust/eo/bapcpa/ccde/CC_Files/CC_Approved_Agencies_HTML/cc_georgia/cc_georgia.htm
http://www.uscourts.gov/FederalCourts/Bankruptcy/BankruptcyResources/JCUSinterrimProcedures.aspx

Is Bankruptcy Moral?

                                                    Is Filing Bankruptcy Moral?

                                                           
              At least once a week, a client or prospective client asks me if filing bankruptcy is ethical, fair, or moral.  As a lawyer who helps people file bankruptcy everyday, I could never do this type of work if I felt that it was not moral.  In fact, I believe so firmly in the process, and its protections, that I am pleased to represent creditors in cases when I feel the filing debtor is NOT acting ethically, or is trying to take advantage of the bankruptcy laws.

            First, I would point out the two primary sources for the Bankruptcy Laws. It is not Georgia's State Laws, or Judges, or even Federal Laws that created this process.  Instead, we find Bankruptcy mentioned in the United States Constitution, in order to guarantee that this right, like the other constitutional rights, cannot be taken away by mere laws or aggressive creditors. The Bible itself mandates that debts are forgiven. Whatever your religion's leanings or beliefs, the fact that bankruptcy has been around since biblical times suggests a history and credibility to this process that transcends our current legislators.

            One way I explain the morality of bankruptcy is by pointing out what types of bankruptcies are NOT allowed.  Our Federal Laws define the bankruptcy process carefully and limit certain debts that are not dischargeable in an effort to keep the process fair and moral. 

       The following are not allowed:

•             Filing bankruptcy too often or repeatedly.
•             Discharging debts owed to children or to ex-spouses for support or alimony.
•             Discharging debts created by intentional or illegal acts like drunk driving or fraudulent behavior.
•             Hiding or concealing assets that should rightfully be liquidated in a bankruptcy.
•             Charging debts or taking cash advances and then immediately filing a case to erase that debt.

            These controls and limitations, and many others found in the laws, protect bankruptcy for what the Supreme Court calls the “honest but unfortunate debtor”.  In some cases, these controls and limitations would require others debtors to pay back their debts in full.  If you find yourself the unfortunate victim of too much debt, seek out help from an attorney so they can determine if bankruptcy or debt settlement is right for you.   If you find yourself trying to take advantage of the system to escape debts that you either should or can pay back, then perhaps your situation lacks the moral justification of others.

            In most cases, the moral and ethical propriety of a bankruptcy is rooted in the foundation that all people deserve a fresh start at least once when their situation demands it. If you are troubled by the thought of not paying your debts, I remind you that while bankruptcy can excuse your nonpayment, you are always welcome to pay the old debts if and when you are able to do so.  With that in mind, I feel that the honest but unfortunate debtor is also both moral, and ethical.

Can I Keep My Home in Bankruptcy?

Saving Your Home While Filing Bankruptcy

           If you are like most Georgians, your home is valued below the unpaid balance of your mortgage.  If you owe more than the home is worth, we call this being "underwater." While bankruptcy cannot necessarily fix this situation, it does not make it worse, it can make it better, and it definitely does NOT cause you to lose the home.

For underwater homes, since there is no equity, your creditors have nothing to gain from selling the home and therefore the bankruptcy judge and trustee do not make you sell the home. Since the home is has lost its value you have the ability to still live in and sell your home is you so choose.  However, if you have a second or third mortgage, the bankruptcy can help remove that lien which is a great way to immediately pick up equity in your home.  Lien stripping is a very important and valuable tool to a bankruptcy debtor and can be an important piece of your financial recovery.

For homes that are paid off or have equity, clients also have options.  The best is usually to file a Chapter 13 bankruptcy.  This plan allows you to retain the equity in your home as long as you pay at least that much to your creditors over the next three to five years.   Congress has essentially said that we like people to have equity in their homes.  You can use it as a loan to yourself.   Keep the $60,000 equity, but pay your creditors back $60,000 in 60 monthly installments.   This can be a great plan, especially if you owe the creditors $300,000 and effectively get a discharge of all the rest while getting to keep your home equity. Clients get to keep the first $20,000 as an exemption with no strings attached.

Our lawyers can explain this and other options to you.  Clients with equity in their homes have much to lose, so do not want to act without full knowledge.

What Happens to my Tax Refunds in Bankruptcy?

 Looking to Keep Your Tax Refund?



                                        

           In a Chapter 7 bankruptcy, your refunds are generally safe from loss because they do not become property of the bankruptcy estate.  Refunds received before you file can be at risk if they are large (over $5,000) and if they are still in your bank account.  Definitely consult an Attorney before filing on your own.   Refunds received after you file are generally less risky.

            In Chapter 13 bankruptcy, tax refunds are very different.   Your entire budget is carefully analyzed and incorporated into your Chapter 13 plan. Once that is done then all of your “disposable income” is pledged to the plan to pay off your creditors.  If you receive a tax refund, then in the federal district this is considered to be extra income, which adds to your disposable income and must go straight to the trustee.   Your refund is then used to pay your creditors.   This is generally terrible news for Chapter 13 filers all of whom have better and different ideas of how to spend their money rather than paying off a 5 year old credit card debt!    While my firm routinely helps clients retain these post-filing refunds to pay for unbudgeted or unforeseen expenses, the receipt of these refunds poses a trap for unwary Chapter 13 filers.  

Every year many clients have their cases dismissed for failure to turn over their tax refunds.    The bottom line is that tax refunds and bankruptcy are a tricky combination, and legal advice is critical to getting it right and to planning properly.

Do I Need a Lawyer to File Bankruptcy?

Filing Bankruptcy

            The federal law allows individuals to file bankruptcy on their own, without a lawyer.  If you reside in Georgia you can go to the 13^th floor of the Russell Federal Office Building in downtown Atlanta, and someone in clerk’s office can help you.  However, this is almost never a good idea.  If you are going to take the huge step of filing a bankruptcy, then it is critical that you also do it right so as to gain the benefits of the filing.  Proceeding on your own poses great risks.

            First, without a lawyer the timing of your case may be all wrong.  You may fore-go certain rights by filing too soon or too late.   Only a skilled lawyer can help you plan accordingly to maximize the benefit of the case.

            Secondly, without a lawyer, the case may not succeed due to the intricacies of filing a 50-page bankruptcy petition.   Federal laws, state law exemptions, Section 341 meetings of creditors and unfamiliar words and forms await at every turn.

           The final reason to engage an attorney is probably the least noticeable.   In order to succeed in a bankruptcy, you must impress and convince a trustee and a judge that your case is for real.  Experience shows that most pro se (unrepresented ) filers simply do not file the proper papers.   The judges and trustees sometimes make assumptions that pro se filers will probably not succeed, and they create presumptions against them.  However, a firm like the Slomka Law Firm has the opposite effect.   Our cases are carefully researched and filed and the trustees and judges assume that the case will succeed.  By filing with us, you gain the benefit of thousands of prior cases.