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Mailbag Monday: Finding a Bankruptcy Attorney

mailbagmondayI talked to a credit counseling agency and they told me to find an attorney about bankruptcy. What should I look for in an attorney and what questions should I ask? I am self-employed, have my own at home business and have gotten in serious credit card debt. I have been paying my mortgage and all cards, except for one. I called them but they will not work with me. I had one card go to collection and just got a collection agency letter in the mail.  I would be willing to sell my house and pay the debt, but prefer not to do that. The lawyer I called said he need $2,000 up front and I do not have that. I do I deal with talking to the collection agency?

— Kathy

Hi Kathy, I’m sorry you’re in this situation. What kind of credit counselor did you go to?  Did they tell you that you were ineligible for a debt management plan? Typically a not-for-profit credit counselor will work with you and your creditors. They’ll put you on a plan — called a debt management plan — that will allow you to pay off your credit card debt in less than five years, and negotiate with your creditors to lower your interest rates. Is that a process you went through? Sometimes, if the counselor thinks that the debt is too high to pay off within that time frame or if you don’t have enough income to support the debt, they will suggest bankruptcy. But I want to make sure you went to a reputed counselor and considered all of your options before going this route. Be sure that the counselor you are working with is an accredited non-profit agency that is a member of the National Foundation for Credit Counseling. You can do a search on their website here.

Once you’ve done that, I’ll direct you to the American Bankruptcy Institute. That organization has a consumer information website that is really helpful. Whether or not you can keep your home and your car will depend on the type of bankruptcy you file, the value, and your state’s exemption rules. Chapter 13 bankruptcy allows you to keep your property and puts you on a repayment plan to pay off your debt.

ABI’s website also has a pro bono resource locator that can help you find pro bono legal help near you if you qualify – it’s certainly worth a look. If you don’t qualify, and you can’t afford an attorney, you may be able to pay off the attorney’s fees through your repayment plan if you file Chapter 13. Be sure to ask about that upfront. You’ll also want to ask the attorney how long the process will take, how much time he or she will devote to your case and how much access you will have to ask questions, and whether he or she will be handling your case exclusively or if it will be passed off to someone else in the office. He should also be able to clearly explain the bankruptcy process in a way you understand – if it sounds like another language, search out other attorneys until you find the right fit.

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