Bankruptcy brings with it an awful Catch-22: You can't afford to pay your bills, so you need to file for bankruptcy, but you don't have the money for the bankruptcy lawyer's fees, so you can't file for bankruptcy. This looks insurmountable at first, but there are ways around it. One of these tactics is to file for Chapter 13 bankruptcy instead of Chapter 7 because of the rules regarding lawyer fee payments. This can work well for some and not well for others depending on how desperate the need for relief is versus the need for all of the unsecured debt to go away.
Why Chapter 13 Is an Option
Chapter 13 bankruptcy is often an option on its own, but in this case, it offers a specific benefit. When you file what's called a fee-only Chapter 13 bankruptcy, you give yourself the option of including your lawyer's fees in the debt you pay back over a few years.
Typically, your lawyer won't file your paperwork until you've paid your fees. Unless you get a lawyer who is willing to do this for free for you, those unpaid fees will become part of your debt that is dischargeable in a Chapter 7 bankruptcy. The problem is that, if you have to wait to file, your credit and bill woes continue. So some debtors turn to Chapter 13 as a solution.
If you desperately need a break from your debt, and you need a restart, a fee-only Chapter 13 is your best option if you can't raise money for the fees through other means. Your Chapter 13 repayment plan does look at the circumstances you're in and why you're choosing that route. While it means you will still owe money, you'll be put on a payment plan that is a lot easier to handle than what you're going through now.
The drawback to fee-only Chapter 13 is that it's not Chapter 7. That means you do end up with debt to pay back. So if you really need a break from your payments but are not in such dire straits that you need to make a move now, you might be better off slowly saving up for the lawyer's fees if you can, and then filing for Chapter 7.
You have to look at which route is more urgent. Will you benefit more from an immediate change to your payments, or from a full reset of your financial situation?
Mull this over and then contact a bankruptcy law office like Haven Law Group, P.C. You need to talk through the process with a lawyer to determine which path is going to help you the most.