The cost of bankruptcy is a question that comes up in most bankruptcy cases.
The answer to this question depends on the complexity of your case and
the type of bankruptcy that you need to pursue. Because bankruptcy lawyers
charge for their time, the longer an attorney spends preparing you for
bankruptcy, the more expensive the case is going to be.
Chapter 7 bankruptcies, which comprise about 85% of the bankruptcy cases, generally
cost between $1,000 and $2,000.
The more costly cases are those where the debtor has previously made transfers
to friends and family or given gifts, or is running a business with multiple
properties, real estates, and transactions. These issues can complicate
a bankruptcy, making it more expensive. Additional costs consist of a
filing fee—$306 for Chapter 7 and $276 for
Chapter 13—credit counseling courses, credit courses, and other minor fees.
You can discuss these costs with our attorney in a free, one hour consultation.
How Can I Afford a Bankruptcy Attorney?
There are numerous options for bankruptcy that can help you afford an attorney.
When you work with Leonard V. Sominsky, ESQ., PC, you can make as many
payments as you like. With us, paying an attorney is like lay away. The
initial payment is $67. Beyond that, you can pay $50 here and there as
necessary, without having to worry about interest rates. You can continue
making small payments up to the point where you've accumulated your
retainer amount and filing fees.
Because your bill payments are dramatically reduced after bankruptcy, you
will be free to make more payments to your lawyer. If this is not the
case, you can always make use of your tax refund. Finally, you may borrow
money from a friend or family member and pay them back after you have
finished the bankruptcy process.
In summary, the following payment options are available:
- Use your tax refund
- Make small progress payments with no interest
- Get the money from somebody else
That's how people finance and typically pay for bankruptcy. During
this time, our office can provide some protection from collection calls.
Our firm can take the collection calls from our clients. In the even that
a collector calls you, you can direct them to call Leonard Sominsky. This
should take them off of your back, at least for a short time.
Can All Debts Be Discharged in Bankruptcy?
While the bankruptcy process is designed to eliminate your debt and get
you back on track for financial stability, there are certain debts that
you simply cannot discharge in a Chapter 7 or Chapter 13 bankruptcy. These
debts are generally associated with the federal government or legal obligations.
The following types of debt are not affected by bankruptcy:
- Child support
- Criminal restitution
- Student Loans
- Tax Debt
- Fraud
There are few exceptions to getting these types of debts cleared. In certain
circumstances, you may be able to
discharge student loans for undue hardship—but hardship is extremely difficult to prove.
Likewise, income tax debt may be eligible for discharge if the return
was due no sooner than three years ago and was filed at least two years
ago. Call our office today to discuss your
tax issues.
Can I Add Debt After I've Filed for Bankruptcy?
Absolutely! If you forgot a debt when first filing for bankruptcy, it has
to be added while the case is still pending. For a Chapter 7 bankruptcy
case, this means you have about five months to file.
If, during that time, you realize that you have forgotten a debt, you can
add it in for a small fee. If your case has already been closed, you should
contact us to find out if you can reopen the case. Reopening a case to
add a creditor requires a larger court fee.
Can I Re-Open My Bankruptcy?
We help clients reopen their bankruptcies all the time. In many cases,
a Chapter 7 or 13 trustee will reopen a case because they want to administer
an asset, such as a tax refund, or list a creditor that they missed when
filing. Reopening is generally accompanied by a small court fee and an
attorney fee. After you reopen a bankruptcy, you can add in any necessary
information. In a month or two, when the case is closed again, the debt
owed that creditor will be discharged.
What Does It Mean If My Petition Is Dismissed?
A dismissal generally indicates that something went wrong during the filing
process. Because bankruptcy is a very complex process, a dozen things
could have led to a dismissal. Failure to submit the right documents is
among the reasons a person might see a case dismissed. It is for this
reason that you should hire legal representation.
You are supposed to submit the following for a bankruptcy:
- Pay stubs
- Tax returns
- Bank statements
- All the schedules
- Disclosures
There are certain time periods for when each of these items are supposed
to be submitted. If any of these forms are not submitted, or are illegible
or late, the bankruptcy will get dismissed. As a result the injunction,
the automatic stay that was protecting you will go away. Creditors will
be free to resume collections.
In most cases, the trustee will mail you a packet asking you for documentation.
If you do not submit these, the trustee can dismiss your case for non-cooperation.
Your case may also be dismissed if you do not appear at your creditor's
meeting, which takes place about 5 weeks into a case in Phoenix. Finally,
your case may be dismissed if you appear at the hearing without your driver's
license or social security card.
Reinstating Your Case After a Dismissal
After your bankruptcy is dismissed, you should not waste any time working
toward a renewal of your case. The claim can be reinstated quickly and
easily if you fix the defect, supplying the documents that are missing
or cooperating with the trustee. You can then request that your case to
be put back on the docket. The automatic stay will come back and protect
you again, but at that point, you might have to go to a court hearing
and explain what happened before a judge.
A trustee might be hesitant to resume your case in these situations because
bankruptcy claims operate on good faith. If the trustee presumes you have
good faith but you suddenly fail to produce the paperwork required of
you, they might question whether you are proceeding with the case in good
faith. As a result, you might have to go over their heads and explain
your problem to the judge.
Is There a Debt Requirement for Bankruptcy?
Absolutely not! Your eligibility for bankruptcy is determined by whatever
amount of debt is too much for you. There is no minimum amount, but your
case needs to make sense financially. When considering a bankruptcy claim
you should ask yourself, can I handle the debt any other way? If you want
to take advantage of a free consultation, our legal team can sit down
and talk about all your options and help you a budget. This will help
you understand where you can go and what you can do as you consider bankruptcy.
Who Will Know If I've Filed for Bankruptcy?
First of all, the people who know that you have filed for bankruptcy are
the ones who get notices from the bankruptcy court that you filed. Those
are your creditors, because you are going to create a list of everybody
that you could potentially owe money to and put it in the bankruptcy.
This is one of the requirements in bankruptcy.
You will then download a credit report or two so everyone on your credit
report who thinks you owe money, including friends and relatives, will
get a letter from the bankruptcy court. Outside of these notices, your
case will be on public record, so anyone who accesses these records could
learn that you have filed for bankruptcy.
When Should I Stop Using My Credit Cards?
It is best to wait 60 days, as any charges in excess of $500 during the
60 days prior to filing for bankruptcy are likely to be considered bad
faith. If you are using the credit cards to buy food, clothing, and other
basic necessities, and spend less than $500 for each charge, then there
is really no problem. You just need to continue to make minimum payments.
This will ensure that you can continue through the bankruptcy process
without facing charges of bad faith.
Typically, when someone approaches our firm, we counsel them to stop using
their credit cards, stop paying, and stop charging on them.
Most of your
credit card debt will get discharged in bankruptcy, but charges made within 60 days might
survive if the lender objects. While they usually do not object, it is
best to avoid using your cards within this time period. This will ensure
that you do not have any unnecessary debt coming out of the bankruptcy process.
Who Can Access My Files?
Filing for bankruptcy is a public record, so the bankruptcy court has your
file. It's not available to everyone. You can't just Google someone
and see if they filed for bankruptcy. Sometimes, something will pop up
because you are talking about 50-60 pages of disclosures about your belongings,
your bills, and your transactions in the last couple years.
The typical bankruptcy file is large and complex. To access this, a person
will have to go through the bankruptcy court. If they have a lawyer, the
lawyer will be able to access the bankruptcy court's website and see
a pdf format of the file. A person who does not have an attorney or the
bankruptcy court log-ins will have to visit the court to see the information.
Because bankruptcy disclosures are public record, they can also be obtained
for the purpose of some kind of collection or divorce proceeding.
What Is a Creditor’s Meeting?
In every bankruptcy case, a first meeting of the creditors takes place
about 5 weeks after you file. The bankruptcy code mandates that creditors
be allowed to question a debtor and ask him about their loans. Since they
cannot ask questions of a consumer over the phone or with letters due
to the automatic stay, this hearing serves as an opportunity for them
to come forward and ask.
95% of the time, creditors do not show up at this meeting. This does not
necessarily mean that you are off the hook, because they can still file
objections within 60 days of the hearing; however, most of them never
file anything either. Still, you are required to attend this hearing.
Our legal team from Leonard V. Sominsky, ESQ., PC will be there as well,
to help you answer any questions thoroughly and accurately.
At the hearing, the trustee will ask you a number of basic questions:
- What is your name?
- What is your address and phone number?
- How long have you lived in Arizona?
- Have you filed for bankruptcy before?
- Have you listed all your assets and liabilities?
- Do you have any inheritances pending?
- Are you filing, or have you filed, any lawsuits?
- Have you filed for bankruptcy under another name or social?
It is an opportunity for the trustee to investigate and ask some questions
on behalf of all the creditors who chose not to show up. If you do not
have all the documents or answers, the trustee will continue the hearing
in another couple weeks. They might ask you also to mail the documents,
and they might have additional questions. It depends what they find and
your case will be unique to your circumstances.
If you have questions, please call my office. I know all the trustees in
Phoenix and each one operates a little differently. I can help you navigate
your situation.
Helping Consumers Find Debt Relief
At Leonard V. Sominsky, ESQ., PC, we are devoted to serving the needs of
individuals who are faced with financial concerns in and around Phoenix.
Our experienced law firm can help you repair your financial situation
through bankruptcy. If you need to take action, rely on the skill of a
Phoenix bankruptcy lawyer from our firm. Do not hesitate to speak with
us at once. We can provide you with the time and attention you need.
We also offer insight on following subjects:
When you need answers, you can trust our legal professionals. We are fully
versed in your legal rights and know how you can assert these rights to
achieve a stronger financial future. With our representation, you can
put a stop to creditor collections, foreclosure, out-of-control debt,
and more. In a free case review, Attorney Sominsky can help you assess
your options and guide you down the best avenue.