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You may have seen a paid ad on the internet by attorneys who offer to file your bankruptcy with no money down: “$0 down Bankruptcy filing!” Sounds attractive on the surface.  Seems appealing we know.  Such an offer would certainly potentially interest anyone who is thinking about bankruptcy because they typically are having a hard time making ends meet. After all, it may be very difficult to get together the money for a bankruptcy attorney. But, what is “zero down bankruptcy filing” and exactly and how does it work?  Is it really good for you and your family in the long run or does it put your best interests in second place behind an attorney attempting to collect extra fees?

To answer these questions it is important to understand the difference between Chapter 7 and Chapter 13 bankruptcy. Chapter 7 will eliminate all dischargeable debts about 90 days after your bankruptcy petition if filed.  Chapter 7 bankruptcy does not require you to pay back any dischargeable debt.  In fact, if you still owe your bankruptcy attorney who works for you any fees you owe your attorney for filing your bankruptcy cannot be collected after the bankruptcy is filed. That bill would get discharged just like the rest of your debts.

Chapter 13 bankruptcy requires you to pay back all or some of your dischargeable debt based on   your income and allowable monthly expenses. You won’t get a discharge of any of your debts for three to five years. Chapter 13 allows you to pay your attorney for their work as part of the monthly payment you make for three to five years.

There are legitimate reasons why a Chapter 13 bankruptcy may be the better option than Chapter 7 bankruptcy, but that determination depends upon your individual facts and circumstances.  You may make too much money to qualify for Chapter 7 or you may have had a prior Chapter 7 filing within 8 years.  You may want to repay your creditors.  You may have on-going medical problems and therefore likely more medical debt on the horizon. There may be secured debt (usually a mortgage) that you are behind on.  You may be threatened with vehicle repossession.  You may have large amounts of tax or student loan debt with large monthly payments.  The point is that the type of bankruptcy most appropriate for you and your family is determined on a case by case basis after analyzing all of your circumstances, not based on a 30 second telephone conversation.

Assuming that you qualify for Chapter 7 bankruptcy why would an attorney try to entice you to file Chapter 13 bankruptcy with offers to file a bankruptcy for “$0 down?” The answer to that question sadly may be that an attorney that seeks to put you in Chapter 13 when you could file Chapter 7 bankruptcy may be doing so only to benefit themselves with the higher fee that is paid to the attorney through the Chapter 13 process.  Put another way that attorney may be thinking of their best interests, not yours.

Putting aside the extra fees you will pay over time through the Chapter 13 there may be other risks for you and your family in filing Chapter 13 if Chapter 7 is the more appropriate option.  For instance, if there is an unexpected change in household income, because of a job loss or illness for instance, and you can no longer make the monthly payment required in Chapter 13, the case may be dismissed.  Once a Chapter 13 case is dismissed your creditors can once again resume their collection efforts on the balance of the money you still owe them.  Thereafter, filing a Chapter 7 bankruptcy will very likely require the payment of new fees to an attorney.

While it is true that “$0 down bankruptcy filing” may give you the protection of the bankruptcy court sooner, rather than later, gaining that protection quicker very often does not pay off in the long run. It often does not benefit a person or family to file Chapter 13 and be subject to the scrutiny of the bankruptcy court and Chapter 13 Trustee for three to five years, pay thousands of dollars to your creditors and additional fees to an attorney when you could get relief from your debts in 90 days through Chapter 7.   Instead of being enticed by “zero down bankruptcy filing” ads which require you to file Chapter 13 and commit to repaying your debt over a three to five year period, it may actually be in your best interest to consider Chapter 7 bankruptcy as an option for debt relief. Although coming up with the attorney fee is certainly a challenge, there are several possible options to consider.  It may actually be cost effective in the long run to wait a few months to save enough to pay attorney fees for a Chapter 7.  Perhaps there is a family member or friend who could assist you with a gift of money towards the fee for Chapter 7 bankruptcy. Or, if your income is low enough, you might even qualify for free legal services from a non-profit agency such as Legal Aid or Legal Services Organization.

It is important for you to learn what you and your family qualify for and which option best serves you and your family and maximizes your success in rebuilding your financial future.  The choice of filing Chapter 13 versus Chapter 7 bankruptcy is one of the most important factors in rebuilding your financial life.  I would urge you not to rely alone on information in an on-line ad or on a web site (even this one) or a thirty second telephone conversation.  Instead, you and your family are much better served by an in-person personalized assessment by an experienced bankruptcy attorney who will guide you in determining whether Chapter 7 or Chapter 13 bankruptcy is the best option for you.  The experienced bankruptcy attorneys at Kinkade & Associates would be pleased to meet with you and discuss your situation in a FREE in-person initial consultation.  Remember, your free initial consultation is in person and with an experienced local bankruptcy attorney that concentrates in debt relief.  We talk with you about what is in your best interests, not ours.  We give you candid advice about your options.  We put your welfare first.  After all, your financial future is too important to settle for less than the individual personalized service and the candid advice about what is in your best interest that Kinkade & Associates provides.

Learn your options.  Do not fall for on-line gimmicks such as “zero down bankruptcy filing” or “one size fits all advice.”  Instead, call Kinkade and Associates to learn what is best for you and your family.  Make a decision on what is best for you, not an attorney.

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