In Part 1, we learned about the common complaint that if you could afford the fees to file for bankruptcy, you wouldn’t need bankruptcy in the first place. We also saw how this is entirely wrong. In Part 2 we will see how there actually is some validity to this complaint, and how to fix the issue.

So What’s all the Complaining About?

We all know that financial matters can be extremely emotional. Often when people find out the cost of bankruptcy, they can’t see the forest for the trees. They simply don’t realize how much debt they stand to eliminate versus the cost of filing.

Probably the biggest problem with affording chapter 7 bankruptcy is the requirement that all fees are paid up-front. If the bankruptcy court permitted filers to set up a payment plan that allowed their case to be filed before making all their payments, bankruptcy would become much more affordable.

This can be especially troubling for people who have a wage garnishment. Only bankruptcy can stop the garnishment, and it can’t be stopped until the bankruptcy case is actually filed. By requiring a client to pay all of his attorney fees up front, he is forced to endure a 25% reduction in income from the garnishment while trying to also pay his attorney $1,500 before stopping the garnishment.

Could it be More Affordable?

Given the amount of liability lawyers currently face for malpractice, it is unlikely their fees would drop for filing cases. Additionally after the great recession of the mid 2000’s, there has been intense competition among attorneys in the bankruptcy field. If anything, bankruptcy is more affordable now thanks to this competition than it was 10 years ago.

The only other way to make bankruptcy more affordable would be to allow clients to have a payment plan but still file their case before paying it off. This would take the sting out of paying the fees all at once, and make bankruptcy more accessible to virtually all who need it.