When Is A Cheap Bankruptcy Attorney Not The Right Choice?
If you’re considering bankruptcy the prospect of hiring an attorney can be daunting, and for some even cost-prohibitive. Due to the significant expense of hiring an attorney many individuals search for the cheapest, or shall we say cost-effective, bankruptcy attorney they can find. This search may lead them to an attorney who charges much less than other attorneys yet delivers the same results. However, the cheapest attorney is not always the most cost-effective attorney. While some clients may benefit from the search for the cheapest bankruptcy attorney, others can jeopardize their case and lose their property.
So, how do you know if a cheap bankruptcy attorney is the right choice?
Real Estate With Equity
If you own real estate with equity the cheapest bankruptcy attorney may not be the best choice. A house with significant value needs to be protected in bankruptcy. Accordingly, your bankruptcy attorney must be certain they can fully exempt the home from liquidation in bankruptcy. Whereas a cheaper bankruptcy attorney may try to cut-corners by relying upon Zillow.com for a free home valuation, a competent attorney will order a Broker’s Price Opinion (BPO) or even an appraisal to be certain of the home’s value before filing your case. If the home’s value is higher than what can be protected in bankruptcy you have the option of not filing bankruptcy. On the other hand, if you file bankruptcy relying on the zillow.com value and the Trustee finds out that your home is actually worth more than what you can protect in bankruptcy, you may lose your home. Therefore, if you have equity in your home it may be cost-effective to pay a little more for an attorney with experience in home-equity cases.
The Means Test
To file chapter 7 bankruptcy your average income for the past 6 months multiplied by 12 must be below the annual median income in California for a household of your size. If your income is above the California median income for a household of your size you can still file chapter 7 bankruptcy if you pass the means test. If your income is high enough to require the means test you should consider spending some money on an experienced Sacramento bankruptcy lawyer. The means test is a very, very complicated calculation. It’s not something you can do on your own, nor can an attorney perform an accurate calculation during a free consultation. The means test requires pay stubs and bank statements for the past 6 months, a thorough question and answer session and a few hours of an experienced attorney’s time. The cheapest bankruptcy attorney may not understand which expenses can be safely deducted, leading to an inaccurate result and the filing of a chapter 7 bankruptcy that will be dismissed or converted to chapter 13 bankruptcy.