Do’s and Don’ts

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Do's and Don'ts

There are no set legal fees for bankruptcy. Subject to bankruptcy court approval, bankruptcy lawyers can charge whatever they want. You can expect legal fees for a Chapter 7 case to be in the range of $750 to $2,500, and fees for a Chapter 13 to be $3,000 or more in some cases, especially if the case involves a business or is otherwise complicated. If you hire a lawyer to rescue a case that you tried to file yourself, you should expect to pay more. Likewise, if you retain a lawyer shortly before a scheduled foreclosure sale, you should expect the fees to be higher because your lawyer will have to drop other work in order to focus on your emergency. As is often the case, it pays to plan ahead!

Some lawyers may require you to pay the legal fees for a Chapter 7 case in full prior to filing.

On the other hand, many lawyers will let you pay all or a portion of their legal fees for a Chapter 13 case through your plan along with your other debts. In other words, a portion of your monthly plan payments will be paid to your lawyer.

Don't deed your house to your kids –
This is a variation on don't give anything away. People sometimes deed their house to their children and reserve a life estate for themselves. That would be a fraudulent transfer if it happened within four years of filing bankruptcy, and the trustee would be able to obtain title from the children. Your life estate would still be good, but your children will lose their remainder interest.

Don't pay down your mortgage or other secured debt –
You Should Have Thought of This Earlier. If you have some cash lying around (most people don't, but you may be the exception), don't use it to make extra payments or pay ahead on secured debts, like your home or your car. That may be evidence of bad faith and can result in your case being dismissed. Moreover, having secured debt can sometimes be a good thing when going through bankruptcy. Remember the means test? Secured debt payments are often one of the juiciest deductions you can take on the test.

Don't file again within a year.
So-called serial filers lose the benefits of the automatic stay. If you have been a debtor in any kind of bankruptcy case within the past year, and it was dismissed for any reason, be sure to talk to a qualified bankruptcy attorney before filing a new case. On the other hand, if your old case was dismissed because you lost your job, and now you got a new one, a judge should understand.

Don't use your charge cards – Goodbye Plastic!
If you put something on a charge card and you've got bankruptcy in the back of your mind, that's probably fraud. Don't do it. Bankruptcy is not for crooks.


Informational Links:

American Bankruptcy Institute
www.abiworld.org

National Association of Consumer Bankruptcy
www.nacba.org

USC Title 11 -Bankruptcy
www.doney.net

Personal Bankruptcy Information
www.bankruptcyinformation.com

Bankruptcy Law Network
www.bankruptcylawnetwork.com

Start Fresh Today, Inc
www.startfreshtoday.com

Life After Bankruptcy
www.lifeafterbankruptcy.com