You’ve probably heard the ads on the radio. Maybe you’ve seen them on television. You’ll even find them on craigslist. Attorneys who offer to file your bankruptcy with no money down. “Zero down! Call now! Only 17 people can get this deal! Only 11 appointments left!”
It makes sense, right? Anyone who is thinking about bankruptcy is having a hard time making ends meet. The last thing they can find funds for is a bankruptcy attorney. So, how does zero down bankruptcy work?
First, let’s go back to the distinctions between Chapter 7 and Chapter 13 bankruptcy. Chapter 7 will eliminate all dischargeable debts about 90 days after your attorney files your petition and it doesn’t require you to pay anything back. In fact, if you still owe your bankruptcy attorney any of his fees, he can’t collect. That bill gets discharged just like the rest of your debts.
Chapter 13 bankruptcy requires you to pay back a certain amount of your debt based on a calculation that takes into account your take home income and allowable monthly expenses. You won’t get a discharge of any of your debts for three to five years. And Chapter 13 allows you to pay your attorney fees over those three to five years.
There are two primary reasons why someone would file Chapter 7 instead of Chapter 13 bankruptcy: he makes too much money to qualify for Chapter 7, or he’s trying to get caught up on a secured debt, usually his mortgage.
So, that’s how zero down bankruptcy works. The attorney takes someone who could file for Chapter 7 bankruptcy and squeezes them into a Chapter 13, with the result being that the only person benefiting is the lawyer who steered him into a Chapter 13 bankruptcy. Is that really in anyone’s best interest, besides the attorney? What happens if, say, a year into the Chapter 13 bankruptcy you can no longer make your payments? Two things: your case gets dismissed and your creditors can come after you for any money you still owe and your bankruptcy attorney has already made a huge chunk of money off your case. No problem, though, because the same attorney will file a Chapter 7 bankruptcy for you. Of course, that’s going to cost you.
Now, just for fun, let’s take a look at ads like this. One attorney is claiming that he only has a certain number of appointments available to help people who want to file bankruptcy with no money down. Funny thing is, the number of slots never changes. I don’t understand attorney tactics like this. Bankruptcy is supposed to provide relief from lenders and creditors who use sharp tactics to get people to borrow money. Attorneys who offer zero down bankruptcy and use advertisements like this can hardly claim to be much different from creditors who prey on people who are struggling financially.
Of course the bottom line is that you’re looking for financial relief right now. And zero down bankruptcy means you’ll get the protection of the bankruptcy court sooner than later. But does it make sense to file Chapter 13 and be stuck under the scrutiny of the bankruptcy court and trustee for three years or more when you could get relief from your debts in 90 days in a Chapter 7? Instead, consider some other options. You could wait a few months to save enough to pay attorney fees for a Chapter 7. Maybe you could ask a family member or friend with help to pay the fee. If your income is low enough, you might even qualify for free legal services from a non-profit agency.
If you’d like to find out if Chapter 7 bankruptcy is an option for you, we hope you’ll schedule a free, no-obligation consultation with an attorney to learn more. We don’t offer zero down bankruptcy, but we do offer honest answers and diligent advocacy to make sure that you get the fresh start you need as soon as possible. You can schedule your consultation online or call 303.331.3403.