The Wall Street Journal published an article showcasing a nonprofit startup that is writing software ala Intuit’s TurboTax that’s designed to make it easier for indigent people to file bankruptcy. This is a laudable goal because many debtors’ can’t afford an experienced New York bankruptcy lawyer to handle their cases, and the filing fees are so high because of the 2005 bankruptcy reform as to make legal representation not worth their while. Frankly, many of their cases are so simple that they can probably get by without an attorney. Software might be a useful fix for such debtors, but there are other options for covering the filing fees.
The oldest one is somewhat controversial: borrowing money to file bankruptcy. Some lenders will lend money to debtors to cover their legal fees. They often dispute the dischargeability of these debts as either a luxury or cash advance, so debtors should not expect to get away with not paying these creditors after bankruptcy.
The next option is more intuitive and fairer to everyone involved: agree to pay the costs of the chapter 7 bankruptcy by an installment plan. The Eastern District Court of New York for example allows debtors to submit Official Form 103A to the bankruptcy court to permit them to pay the filing fees on an installment basis. The minimum payment required is $40, but debtors can structure the payments as they wish so long as the full filing fees is paid within 120 days of filing the case. Many chapter 7 debtors have some kind of income, so once they stop paying their regular bills thanks to the automatic stay, they should be able to afford their bankruptcies. Sometimes debtors rely on their income tax refunds to cover the filing fees.
Debtors who are truly in dire straits can file Official Form 103B, which helps them apply for a full waiver of the bankruptcy filing fees. This form is longer and more detailed than Official Form 103A because bankruptcy courts want debtors to explain why they can’t afford to pay the fees. The bankruptcy court can grant the request but still require debtors to pay the fees if it deems the waiver unwarranted.
The debate about the extent of the need for bankruptcy lawyers will continue, but the developers of the software insist that they aren’t taking work away from lawyers—the debtors using it weren’t going to hire attorneys anyway. However, unlike tax-preparation, bankruptcy cases can become very complicated very quickly and mistakes in the software can deny debtors benefits to which they’re entitled, e.g. exemptions of their assets, or put them in situations that can only be solved by hiring a lawyer after all.
The Wall Street Journal article is here, and bankruptcy forms are here.
If you are experiencing serious financial difficulties—whether you think you can afford bankruptcy or not—then talking to a New York bankruptcy lawyer can help you strategize your options.
For answers to more questions about bankruptcy, the automatic stay, effective strategies for dealing with foreclosure, and protecting your assets in bankruptcy please feel free to contact experienced Brooklyn bankruptcy attorney Bruce Weiner for a free initial consultation.
Rosenberg, Musso & Weiner, L.L.P
26 Court St # 2211
Brooklyn, NY 11242, USA
718-855-6840
http://nybankruptcy.net/
https://plus.google.com/118376380896545513115
