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Expert Bankruptcy Discussions And Opinions
Our bankruptcy experts discuss the consumer bankruptcy issues of the day. Learn all there is about online chapter 7 and chapter 13 bankruptcy filing. Topics covered include online bankruptcy filing, do it yourself bankruptcy | full-service bankruptcy preparation | Free bankruptcy filing | bankruptcy exemptions | recommendations and reviews and more.
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 AttorneyWhich 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.
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 LotEven 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:
- 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.
- 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.
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 customersThese 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?
Cheap Bankruptcy Secured Debt Handling with Miller BankruptcyIf 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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For More on Reaffirmations
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 PreparerI 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:
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 FilingIf 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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