Well that is the fundamental question. You are in rough financial shape and need to file for bankruptcy. You just lost your job or just closed your business. Creditors are calling. How do you make the break between saving up to file bankruptcy and holding off the creditors?
Here is a breakdown of what bankruptcy costs and some suggestions on how to prepare and pay for it.
You will face two expenses: the court filing fees and the attorney fees for the bankruptcy lawyer who represents you from the beginning to the end of your case. A bankruptcy attorney is not just a petition preparer but is your counselor who will answer your questions and represent your interests at all stages of the case: initial intake, preparation of the petition, schedules, and statement of financial affairs, filing the case, and representing you in the case. Representation means dealing with correspondence from the court, creditors, and the bankruptcy trustee. It also means reviewing filed documents. Motions for various relief and objections to certain matters may be required on a case-by-case basis.
Filing fees: $335 for Chapter 7 and $310 for Chapter 13.
Attorney fees: Depending on the complexities of the case, a typical individual Chapter 7 case in the Northern District of California could start as low as $1,500 and be has high as $3,500. A corporate Chapter 7 or an individual with a business may pay more depending upon the size and complexities of the business. A Chapter 13 case costs more because your attorney has to represent you for 3-5 years. The base Chapter 13 in the Northern District of California is $4,500. Additional fees apply if you have an operating business, real property with secured claim(s), tax claims, and vehicle loans. A bankruptcy attorney can give you an exact quote after going over your specific situation.
How to Pay the Attorney Fees
Most attorneys accept some sort of payment plan while the case is being prepared for filing. Attorney fees in a Chapter 7 cases must be paid in full before the case is filed. The initial retainer for attorney fees in Chapter 13 are negotiable, but on average the initial retainer is $2,000 – $3,000 with the balance of the total Chapter 13 fees paid as part of the Chapter 13 plan payment.
David Arietta offers reasonable payment plans for those clients contemplating filing for either Chapter 7 or Chapter 13 bankruptcy relief.
Many clients are amazed to learn that they can afford to file bankruptcy with a bit of pre-bankruptcy planning. David Arietta can provide a comprehensive analysis of the situation. Pre-bankruptcy advice can include stop making payments on credit cards and not cashing out retirement accounts. Clients should not be pressured by credit card companies to go on payment plans. Instead clients should confer with a bankruptcy attorney. Under California law, a collection agency cannot continue to call you if you are represented by an attorney. That alone can give people a good amount of time to get situated and organized before having to file for bankruptcy relief. Another benefit of consulting with an attorney is that the collection agency will be less likely to file suit once a bankruptcy attorney is handling the account.
A certified bankruptcy specialist like David Arietta has the knowledge and experience to give you the best representation. The State Bar of California has certified him as a specialist in bankruptcy law. To be a specialist, he had to have a certain amount of experience, pass a written examination, and be recommended by both his peers and a bankruptcy judge.
Call David at (925) 472-8000 to go over your options.