Kentucky Bankruptcy Law

Counsel with Care

The Scoop on the $71.00 Bankruptcy

I saw a TV ad yesterday afternoon by a law firm that does a high volume of bankruptcy filings. I had just finished a five-hour evidentiary hearing and so I took off a little early to refuel. Those evidentiary hearings require tremendous and sustained concentration.  Anyway, this ad surprised me. The attorneys at the firm stated in the commercial that they knew how tight people’s budgets were so they would “get started with your bankruptcy for only $71.00.” I got out my calculator and started crunching numbers to see how they could stay in business.

You see, that law firm has a high overhead. They spend thousands and thousands every month in television commercials and billboards. They also utilize paralegals and support staff to prepare petitions and other necessary documents to file a bankruptcy. They have a nice, decent sized building in a strategic main thoroughfare. And, of course the attorneys want to make a decent living also. All that adds up to high overhead costs that have to be covered somewhere.

In my situation, I do all the work myself and so I have no support staff. My partner and I have a reasonable lease on a 200-year-old “mansion” (a.k.a. farmhouse) in the middle of a subdivision. Our advertising budget… well, this is it. You are looking at it. Sure, I also want to make a decent living, but still this all adds up to very low overhead and this gets passed on to you.

So, basic math dictates that the big law firm must make much more money than the small law firm. They are either charging more for each case than I do, they are cutting costs somewhere, or both. I cannot say anything more specifically about that law firm because I do not know more. I can say that, in general, businesses that do volume business build in costs reduction by standardizing everything. Think McDonald’s.

So, how can they advertise this $71.00 deal? Go back to McDonald’s and think dollar menu. The dollar menu offers a very low-cost option that is small and bare bones. But, that still does not explain it all. True, they are likely basing that $71.00 on their most basic services in the simplest of Chapter 7s. And, that still cannot possibly be done for $71.00. So, the key is in the phrase “get started for….” Lawyers know to listen for such phrases, but the general population over skips over them. This is how marketing is so effective.

Easy enough. I do free consults already and then I typically ask for $200.00 to be paid into escrow before I actually am “retained”. This means that I will then take creditor calls when necessary, you can tell creditors to leave you alone and contact me, and I will complete the means test. I suspect that for $71.00, they will only have their paralegal gather paper work and perhaps even do a rudimentary means test, but then they will work out a payment plan for the rest. Well, I will match that. I will even beat it. For $70.00 I would also be willing to gather your paper work and do a means test. Then, we can make a plan for the rest, but I will not be able to deal with creditors for you. Just mention this blog post for this special offer.

Do not be fooled, though – the $71.00 (or my $70.00 offer), will NOT get you a bankruptcy. It just gets things started. You will have to come up with several hundred dollars prior to filing for attorney fees whether you come to me or go to the firm with the advertising. Fees not paid prior to filing a Chapter 7 would be a debt owed in the bankruptcy and discharged just like every other debt. The difference to consider: my partner and I actually do all the work ourselves and ensure high quality of work.

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December 11, 2013 - Posted by | attorney fees, Bankruptcy, Chapter 13, Planning | , , , , , , ,

1 Comment »

  1. Hello exceptional blog! Does running a blog like this take a lot of work?
    I have no expertise in coding but I had been hoping to start my own blog soon. Anyhow, if you have any recommendations or techniques
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    Comment by nanoo | July 7, 2015 | Reply


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