Many types of debt can be discharged during bankruptcy, and sometimes legal fees can be among the debt that gets wiped clean from your slate. If you owe lawyers a significant sum of money and have other debts complicating your life, this can make filing for bankruptcy seem like an attractive option. However, you should remember that we said that legal fees can “sometimes” be wiped out during this process. You need to talk to a New City bankruptcy attorney and see if what you owe can even be addressed this way.
Can Bankruptcy Discharge Legal Fees?
In many cases, legal fees are an unsecured debt. This means that they can usually be taken care of through Chapter 7 or Chapter 13 bankruptcy, the most common types of bankruptcy filed by individuals.
Chapter 7 requires you to sell off assets and pay off creditors. Chapter 13 requires you to make a payment plan and pay off creditors within three to five years. You may not end up paying off your debts completely, but you pay a significant portion of them and that is usually enough for most creditors. This can include lawyers who you owe money to.
When Can’t Bankruptcy Discharge Legal Fees?
There are some situations where discharging legal fees through bankruptcy is not an option though. Some common obstacles include:
Family court costs: If you were involved in a fight for alimony or child support and you hired a lawyer, the fees you paid them might not be dischargeable. This is because child support and alimony are called “support obligations.” They cannot be discharged during bankruptcy, and as a result any legal fees related to them are often tough to clear from your record.
Liens: A lawyer might give you a contract that says that they can put a lien on your property if you do not pay them. If you are in this situation and there is a lien on your home, then bankruptcy won’t solve your problem. You have to pay the lawyer or your lien will remain.
Upfront payments: You also are not going to be able to hire a lawyer to file for bankruptcy and then try to get out of paying their fees. You will probably be forced to pay most or all of their bill before the bankruptcy process gets underway.
Do I Need a Lawyer?
It can seem like a bad idea to hire a lawyer when you already have legal debts to worry about, but it’s not easy to file for bankruptcy on your own. An attorney can make sure that you don’t make costly mistakes that waste time or result in your case being dismissed without debts being discharged.
Contact Our Law Firm
If you want to learn more about the bankruptcy process and whether it’s a good option for you, contact the Lauterbach Law Firm. We can schedule a consultation and help you weigh your options. If we can help you get a fresh financial start, we’ll get right to work.
