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Cheap Bankruptcy Attorney

Cheap Bankruptcy lawyers

by BRAD JENSEN Bankruptcy Expert



Disclaimer: In the interest of disclosure, I am not an attorney. I work at a firm of certified bankruptcy lawyers and so I am intrinsically biased in favor of certified bankruptcy attorneys for online consumer bankruptcy filing.


"The creditor meeting is a creditor meeting only in name. In almost all cases, creditors do not bother to show up at the creditor meeting."


How to File Bankruptcy on The Cheap


There are two separate considerations when it comes to filing bankruptcy cheaply. One is the cost of having a cheap bankruptcy lawyer prepare the bankruptcy and the other is real hidden cost of having a cheap bankruptcy attorney. Let us look at these two considerations, beginning with the latter.

The Hidden Cost of a Cheap Bankruptcy Attorney

Which is the better value?
  • The car you paid $100 for, which off the bat cost you $25,000 to fix, or

  • A car you paid $200 for which is worth $25,000.
As obvious as this may be, a lot of people filing bankruptcy make their bankruptcy hiring decision solely on the price, without looking at the big picture. What is the big picture as it pertains to filing bankruptcy?

 
The big bankruptcy picture is not just how much you will pay the attorney or bankruptcy preparer, but rather, how much you will have left in your pocket when the bankruptcy is over. Here is an example.

Let us assume you owe $40,000 in unsecured debts and $30,000 in secured debts, for a total of $70,000 in both secured and unsecured debts. Let us also say that you have the choice of two cheap bankruptcy lawyers and one cheap bankruptcy preparer, like the good ones reviewed on Bkreview.com

Lawyer #A Charges $900 in attorney fees but when he is done representing you in bankruptcy, you discharge the $40,000 in unsecured debts and you reaffirm the $30,000 in secured debts.

Lawyer #B Charges $2,000 in attorney fees but when he is done representing you in your bankruptcy, you discharge the $40,000 in unsecured debts and you also discharge $30,000 in secured debts, and you still get to keep the secured collateral, free and clear.

Preparer #C A non-lawyer bankruptcy preparer charges $200 in service fees but when he or she is done preparing your bankruptcy, you discharge the $40,000 in unsecured debts and you also discharge the $30,000 in secured debts, and you still get to keep the secured collateral free and clear. Which of the three is the better choice? Here is the breakdown of your real cost:

Lawyer #A

   $900 - Legal Fees, plus
$30,000 - Secured debt to repay

$30,900 - Total Cost


Lawyer #B

 $2,000 - Legal Fees, plus
     $0 - Secured debt to repay
 
$2,000 - Total Cost


Bankruptcy Preparer #C

   $200 - Preparer Fees, plus
     $0 - Secured debt to repay
   
$200 - Total Cost

So you can see, the real cost of a bankruptcy is measured mostly in the amount of debt that you can discharge in bankruptcy, rather than the fee that you pay the cheap bankruptcy lawyer or cheap bankruptcy petition preparer. Talking about bankruptcy preparers, while I prefer certified bankruptcy lawyers since I work for at such a firm, I like Miller Bankruptcy because they do more than prepare bankruptcies. They understand how to help debtors get out of secured debts, in addition to their bankruptcy preparation services. You can find them as well as all the best regarded full-service bankruptcy preparers at Bkreview.com.

Even If Your Lawyer Works For Free, Your Bankruptcy Could Still Cost You a Lot

Even if your uncle was a cheap bankruptcy lawyer and is willing to prepare your bankruptcy for free, your bankruptcy could still cost you $5,000, $15,000 or even $30,000. How is this possible?


The one thing almost all cheap bankruptcy lawyers do that hurt their customers is to have them reaffirm their secured debts.

It really has nothing to do with the fee your bankruptcy lawyer charges you and it has nothing to do with whether or not you use a bankruptcy attorney or a full-service bankruptcy preparer.

It comes down to the fact that almost all bankruptcy lawyers have their customers sign reaffirmation agreements with their secured creditors, and signing reaffirmation agreements indiscriminately will prevent you from getting a clean break from all your creditors.

The standard thinking among all cheap bankruptcy lawyers is that if you have a secured debt, you have only two choices as follows:
  1. You surrender the property or collateral to the creditor and as a result, the debt becomes unsecured like any credit card debt and thus can be discharged.

  2. You sign a reaffirmation agreement with the secured creditor which essentially says that you can keep on paying the creditor as usual and as a result, you can keep possession of the collateral.
For example if you purchased say, $20,000 in furniture and appliances and you financed it with a company like Sears Finance, HFC (Household Finance) or any of the other finance companies, the finance company secures the $20,000 debts with the furniture and appliances themselves. The same applies to a car loan where the car itself secures the loan used to finance it. Another example of a secured loan is one where you ask the bank or finance company for a loan and they ask you to put up something you already own, as collateral. In all of these situations, if you default on the loan, the finance company can repossess the collateral property and sell it to cover their cost.

In all of these secured loan situations, almost all cheap bankruptcy lawyer as well as expensive bankruptcy lawyer will tell you that you can either surrender the collateral property to the creditor and be free from the debt, or you can sign an agreement with the creditor that allows you to pay the creditor as usual in exchange for you keeping the property. This is accepted standard practice and bankruptcy lawyers do not think twice before giving their customers these two choices.

But there are 3 more choices that lawyers do not tell their customers

These three other choices will allow the debtor to either keep the collateral property free and clear without making anymore payments, or to greatly reduce the amount they owe and still keep the collateral property. But you will not find this out from most bankruptcy lawyer, regardless of whether they are cheap bankruptcy lawyers or expensive bankruptcies.

There are two reasons most bankruptcy lawyers will not tell their customers about these three other secured debt options. (1) They do not know about the bankruptcy laws that make this possible, or (2) they know how to do this but it is not worth their time. For most lawyers though, it the problem is that they are not board certified in bankruptcy and so, they do know these secured assets bankruptcy laws.

If you have done extensive reading in preparation for your bankruptcy filing...

...you would be surprised that you know more about bankruptcy law than the average lawyer.

So just because you hire a cheap bankruptcy lawyer does not mean that he or she knows anymore than you do. They will push you into either surrendering your secured property or reaffirming them with the creditors.

As for the certified bankruptcy lawyers that know these laws, whether they are cheap bankruptcy lawyers or expensive bankruptcy lawyers, most of them will not bother applying these secured debt laws to their ordinary customers, simply because it is not worth their time.

Couldn't you just pay them more so that they can do the extra work needed to let you walk away from the secured debt and retain the property? The answer is that once the bankruptcy has been filed, they cannot get any more money from you, without the hassle of going in front of a bankruptcy judge and making their case. If they did that, they would take many hours away from recruiting new paying clients, to go to court to ask the judge for permission to charge you more money, which the judge may or may not grant. It is more profitable for them to just have you either surrender the secured collateral or reaffirm it with he creditors so that they will be free to go after the next sale.

So what do you do?

The good news is that you do not need a lawyer to help you use these secured debt laws in your cheap bankruptcy. In most bankruptcy courts, it comes down to simply filing one or two extra documents which may or may not even require a court appearance. The hard part is knowing which of the various secured debt laws apply to which of your secured debts and which specific document is used for which.

This is because not all secured debts are the same in the eyes ob bankruptcy law. Also, while almost all secured debts can have their principal balance crammed down to save you thousands, not all of them can be crammed down straight to zero. So you need help with knowing which is which.

Cheap Bankruptcy Secured Debt Handling with Miller Bankruptcy

If you have secured debts, your best bet is to use a bankruptcy preparer such as Miller Bankruptcy which specializes in helping debtor use these secured debt laws to get rid of the secured debts, while keeping the collateral.

As I said, many secured debts can be crammed down straight to zero while almost all the others can get crammed down to as little as ten cents to the dollar. Miller Bankruptcy provides detailed information to their customer on each type of secured debt and each type of cram down, at no extra cost. This is a large part of why we recommend them for your cheap bankruptcy, if you cannot afford a board certified bankruptcy attorney. Remember, even certified bankruptcy lawyers will charge a lot more than their usual attorney fees for secured debt cram downs.

In addition to providing all of their paying customers the resources to get rid of the secured debts at no additional cost, Miller Bankruptcy is one of the best all around bankruptcy preparers available. This is one more reason I like them. You can find them at www.MillerBankruptcy.com

If you prefer to use a cheap bankruptcy lawyer, find a certified bankruptcy lawyer who can help you with more than just filing the basic bankruptcy. Ask them on the phone before you go to see them, if they know how to eliminate the secured debt while keeping the collateral and how much extra they charge for this. If they draw a blank, then you know they are not board certified or skilled in this area.
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The Cost of Hiring a Cheap Bankruptcy Attorney


As I said at the beginning, there are two consideration when it comes to filing bankruptcy cheaply, and we have talked about the first one. The second consideration is the cost of hiring the cheap bankruptcy attorney in the first place. The first question is whether or not it makes a difference if you use a cheap bankruptcy attorney or a bankruptcy petition preparer. Obviously a full-service bankruptcy preparer will be a lot cheaper than even the cheapest bankruptcy attorney but are they worth it? Let me answer this question.

Cheap Bankruptcy Attorney or a Full-Service Bankruptcy Petition Preparer

I recommend using a cheap bankruptcy attorney if he or she is certified in bankruptcy and only if you own a corporate business and the business is the one filing bankruptcy. If that is not the case, then there is no difference between hiring an a cheap bankruptcy attorney or using a full-service bankruptcy preparer. You can find a list of all the reputable full-service bankruptcy preparers at Bkreview.com

For a strict chapter 7 Bankruptcy, you are better off with a bankruptcy preparer than with a cheap bankruptcy lawyer.

The first reason The reason is that the top full-service bankruptcy preparers will do everything a cheap bankruptcy lawyer will, but at 1/10th the price.

(1) A good full-service bankruptcy preparer company will do everything that a cheap bankruptcy attorney can, but for 1/10th the price.

(2) The top bankruptcy preparers have far more experience preparing bankruptcies than just about any cheap bankruptcy attorney.

(3) The best full-service bankruptcy preparers can do certain things to help you that a cheap bankruptcy lawyer either cannot or is not allowed to do.

(4) You may be better off at the creditor meeting without an attorney than with an attorney. Let us look at this first...

The Creditor Meeting With or Without a Cheap Bankruptcy Attorney

Many people hire cheap bankruptcy attorneys for the wrong motives. They hire the cheap bankruptcy lawyer because they are afraid of the creditor meeting. They fear that the creditors will be there and object to their bankruptcy, or that the judge will humiliate them with probing questions.

If you are one of these people, you are making a mistake. Here is why:

 1  There is no bankruptcy judge at the creditor meeting. The meeting is conducted by a trustee. A judge is not permitted by law to show up at the hearing, not even as a spectator. In fact, not only does the judge not come to the creditor meeting, but ...

You will never appear before a judge at any time during your bankruptcy from start to finish, not just at the hearing

 2  The creditor meeting is a creditor meeting only in name. In almost all cases, creditors do not bother to show up at the creditor meeting. In the odd event that a creditor shows up, they will not talk to you during the meeting or approach you in front of the trustee or ask you any questions. In that odd instance, the creditor rep is there to offer you a reaffirmation when the hearing is over. A creditor cannot object to your discharge at the creditor meeting. In the very rare event that a creditor objects, they will only do it in writing to the court, not to the trustee.

You will see only 2 people throughout your bankruptcy, from start to finish. 

You will see the filing clerk only once when you file your bankruptcy

You will see the bankruptcy trustee only once throughout your bankruptcy from start to finish, which is at the creditor meeting.

 3  In almost all consumer bankruptcy cases, with or without a cheap bankruptcy attorney, the trustee asks only a few canned questions. The process lasts only a minute or two, and often just a few seconds. He or she will first inform you that you have other bankruptcy options other than chapter 7. They will then ask you if you were pressured into filing bankruptcy, followed by, if you want to complete the bankruptcy process.

 4  If you provide simple responses to these trustee questions, the whole thing is over for you right there and then. You will most likely never see the trustee again. If you do not plan on changing anything in your bankruptcy, you just wait until the court mails you the discharge notice and then it is all finished. It is almost easier than renewing your vehicle registration or renewing your drivers license, yet this is what scares many grown men and women into shelling thousands for a cheap bankruptcy lawyer.

 5  If you are afraid of the creditor meeting and decide to hire a cheap bankruptcy attorney, they attorney cannot really represent you in the sense of you staying at home. You still have to be there at the trustee meeting and you still have to answer the two or three questions we mentioned above.

 6  If you hire a cheap bankruptcy lawyer for the 341(a) hearing as it is called, your biggest surprise is that the lawyer will not be allowed to speak for you. This is because you are not on trial and because there is no judge present. The cheap lawyer can only state his or her name for the record and then keep silent. This comes as a big shock for  most debtors who have a lawyer. Their first shock is that it was so easy, and they were scare for nothing. Their second shock is that the cheap bankruptcy attorney did not say anything. This is the part where many debtors kick themselves for not heeding the advice of people like me.

Once your chapter bankruptcy form are prepared and filed, the result of your chapter 7 bankruptcy filing is set and the trustee meeting will not change the outcome.

I am not saying that you should not have a cheap bankruptcy lawyer help you, after all I work for board certified bankruptcy lawyers. I am saying that what most consumer debtors need is someone to prepare the bankruptcy forms properly, not someone to hold their hands at the trustee meeting. If money is tight then hire a good full-service bankruptcy preparer like the ones listed on BkReview.com.

I particularly like Miller Bankruptcy and BridgeportAmerican as well as USA bankruptcy Associates. These three are the most reputable ones. Miller Bankruptcy is my top choice because they specialize providing information on how to cram down secured debts while still keeping the securing collateral asset. You read a review of all the top bankruptcy petition perparer companies at Bkreview.com

On the other hand, you need a lawyer if you want to file a business bankruptcy. You are best off with a certified bankruptcy lawyer since we are talking about a corporate bankruptcy.

Do It Yourself bankruptcy Filing

If you are considering filing a do it yourself bankruptcy without using a cheap bankruptcy lawyer or a bankruptcy preparer, then you want to read what we have to say in the next article, Do It Yourself Bankruptcy. Click here for the article.

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