Kentucky Bankruptcy Law

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Practice Tip: Filing fee installment payments

A debtor filing bankruptcy can apply to the court to pay the filing fee in installments AFTER filing the petition. For example, the filing fee now for a Chapter 7 bankruptcy is $335.00. It can be really hard for a person to come up with that AND their attorney fees. Since their unpaid attorney fees would be discharged along with everything else in the bankruptcy, those nearly always have to be paid up front. But, the filing fees are a different matter since the court retains the power to dismiss the case if they go unpaid.

In the Eastern District of Kentucky, installment applications taking up to 120 days post-petition to pay the fees are routinely granted. However, there has been a shift in how the court handles those installments. Until recently, the clerks had a lot of latitude as to when those payments were made so long as they all were paid by the final deadline. NOW, though, if debtors run late on ANY of the installments, a Show Cause Order is being issued to make the debtor appear in court. If they cannot convince the judge that they have a good reason for running late, their bankruptcy may be dismissed.

So, if you are going the installment fee route and paying monthly payments of $83.75 for a Chapter 7, make sure you give yourself reminders. Also, you cannot pay by personal check. You either have to show up in person with exact change or you must mail in a money order for the exact amount. The courts system does not account for payments that are even a penny off. You can double or triple up (i.e. $167.5 or $251.25) or even pay it in full early. Just do not round up to $84.00.

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July 8, 2014 Posted by | attorney fees, Bankruptcy, Chapter 13, Chapter 7 | , , , , , , | Leave a comment

It is getting downright expensive to file bankruptcy

This information just released from the National Association of Consumer Bankruptcy Attorney’s (of which I am a member):

The Judicial Conference approved new filing fee increases effective June 1, 2014.

The administrative fee and a.p. filing fee increases are as follows:

The total new filing fee for each chapter will be as follows:

  • For filing a petition, or for filing a motion to divide a joint case, under Chapter 7: $335
  • For filing a petition, or for filing a motion to divide a joint case, under Chapter 12: $275
  • For filing a petition, or for filing a motion to divide a joint case, under Chapter 13: $310
  • For filing a petition under Chapter 9, 11, or 15: $1,717

Shew!

April 16, 2014 Posted by | Bankruptcy, Chapter 11, Chapter 13, Chapter 7 | , , , , , , , , | 1 Comment

Making Chapter 7 bankruptcy more affordable

First of all, on this anniversary of the 9/11 terrorist attacks, I want to acknowledge the sacrifice of so many Americans in keeping the nation free. Thank you all!

The filing fees charged by the United States bankruptcy court are no small matter. The court charges $306.00 to file a Chapter 7. This is anywhere from 1/3 to 1/4 of the attorney fees most attorneys charge for a basic consumer bankruptcy. Filing fees for a Chapter 7 are higher than for any other lawsuit (other than Chapter 9 or 11 bankruptcy). Part of this comes from the desire for the bankruptcy courts to be self-sufficient rather than draining tax dollars. Part of it supports the appointed trustee program since $60.00 of the fee goes to the Chapter 7 trustee for their work.

The attorney fees in the typical Chapter 7 consumer bankruptcy need to be paid prior to filing the petition. Otherwise, they become an unsecured debt discharged within the bankruptcy. This is because most Chapter 7 cases are “no-asset” cases. Everything the debtor owns is covered by an exemption and so there is nothing to liquidate to pay priority and unsecured debts. Also, though no one really is concerned much about it, this makes your attorney a creditor in your case.

One make to make the Chapter 7 more affordable, then, is to pay the filing fees of $306.00 post-petition. Your attorney has to file an application for this special consideration along with the petition, but the courts routinely approve them. The fees have to be paid in full within 120 days of the date of filing the petition. This can be done by mailing a money order (no personal checks) to the court clerk for $76.50 or multiples of $76.50. You can also pay in cash if you go down to the clerk in person, but be sure to have the exact amount needed because they will not make change.

By paying the filing fees after filing the bankruptcy, you cut the overall up-front cost of the filing by a good 20%. This makes it a little easier to get the case filed. Once in bankruptcy, any garnishment stop and so you should more readily be able to make the installment payments.

September 11, 2013 Posted by | attorney fees, Bankruptcy, Chapter 7, Discharge, Exemptions, Pre-filing planning | , , , , , , , | 1 Comment

Attorney fees in a Chapter 7 or 13

Times remain tough all around despite pronouncements of recovery. It is always true that folks looking to file Chapter 7 or Chapter 13 bankruptcy have a hard time affording legal help for the process. This has become even more difficult in recent times. This can often be worked around in a Chapter 13 where attorney fees can often be paid through the plan itself. However, in n0-asset Chapter 7s, if attorney fees are not collected up front, then they are discharged with every other unsecured debt.

Often, Debtors have continued paying debts that will be included in the bankruptcy and discharged. So, if time permits before filing, those funds can be directed instead toward attorney fees. It can also help to pay the court filing fees ($306) in four installments rather than all at once. This works because the court has the power to dismiss the Chapter 7 if all fees are not paid.

I have also taken the step of reducing my Chapter 7 attorney fees down to rock bottom while still providing all the same services. I have not done a survey and I suspect that if folks call around they may find someone who will quote less, but I was recently told by one client who had called around that my fees were the lowest. I am able to do this because I do not have an elaborate marketing campaign and I keep all my other overhead items low. Even though my Chapter 7 fees are so low, I still do all the work myself.

September 3, 2012 Posted by | attorney fees, Bankruptcy, Chapter 13, Chapter 7, Plan, Planning, Pre-filing planning | , , , , , , , , , | 4 Comments