Can I borrow the money to pay my attorney fee to file for bankruptcy?
Often new clients will ask if they are allowed to borrow the funds to pay for their Chapter 7 bankruptcy. It is tempting to borrow the cash to file for bankruptcy, but beware! If you incur debt right before filing for bankruptcy, the creditor you borrowed from can actually file an adversary proceeding in your case asking the Court to find that debt non-dischargeable, or even worse, deny you a discharge altogether!
Even though it may seem like your reasons for borrowing the money are valid and reasonable, the bankruptcy court will look at borrowing right before filing as a bad thing. This is because borrowing money when you know you are going to file for bankruptcy can be considered bankruptcy fraud. This is a very serious allegation that can be made by a creditor or the U.S. Trustee, and can result in your case getting dismissed without you receiving a discharge. Even worse, if your case is dismissed under those conditions, you will NEVER receive a discharge on the debts you listed in your bankruptcy petition!
So, what are some options when you need to file Chapter 7 and you don’t have the cash on hand?
First, you can look to a friend or family member to loan you the money to file, and just plan to pay them back after you receive your discharge. Another option is to wait until you file your income taxes and use your tax refund to pay for the bankruptcy. Other times, people will sell items of value. Just be sure to sell the item for fair market value and list the sale on your bankruptcy petition when you file.
If you are facing a wage garnishment and the ideas mentioned above are not options for you, and you cannot wait the amount of time it would take to make payments toward the balance, you may want to consider filing a Chapter 13. This is an option to explore when you are discussing bankruptcy with an attorney at your new client appointment.
Make an appointment to speak with one of the experienced bankruptcy attorneys at O’Bryan Law Offices to discuss your options before taking money from your retirement account. Bankruptcy can provide protection for your retirement account and your financial future. Call us today at 502-339-0222 for a free bankruptcy consultation.
