How Chapter 13 Helps You Pay for Your Bankruptcy Attorney
When you are considering filing for bankruptcy protection, you have to decide whether the best option is Chapter 7 or Chapter 13. Either way, the assistance of a qualified attorney is vital to a successful outcome, which raises another question. How do you pay legal fees when you’re bankrupt?
The answer may lie in the type of bankruptcy you choose. Chapter 13, which offers a way to restructure your debt over time, allows you to build your attorney’s fees into your debt repayment plan.
People filing for bankruptcy are required to pay administrative expenses, such as court fees, credit counseling and attorneys’ fees. In a Chapter 7 bankruptcy, also known as a liquidation, these fees must be paid in full at the beginning of the case. That can be an insurmountable cost for somebody who is unable to pay their existing bills.
In a Chapter 13, also known as a wage earner’s bankruptcy, you agree to a three- to five-year plan that repays a portion of your unsecured debt. At the end of the repayment period, any remaining debts that are outstanding will be discharged.
Administrative expenses, including attorneys’ fees, can be treated as part of your repayable debt in a Chapter 13. Therefore, whatever attorneys’ fees haven’t been paid at the beginning of the case can be included as debts in a repayment plan. Moreover, administrative expenses take priority over other debts in the plan, which ensures your attorney will be paid.
This ability to finance your attorneys’ fees is a major advantage of a Chapter 13, even though this path takes much longer to complete than a Chapter 7. A wage earner’s plan empowers you to retain a qualified and experienced bankruptcy attorney who can offer you effective representation and lets you pay the attorney in monthly installments over time.
At the Law Offices of Michael Jay Berger in Beverly Hills, I help clients successfully navigate the bankruptcy process. I have decades of experience handling Chapter 7 and Chapter 13 bankruptcy matters. Schedule a free initial consultation by calling 310-271-6223 or contact me online.