If you haven't heard of the "Southern-Style Bankruptcy", you probably will soon because several news outlets have recently run stories on this trend in the lower half of our country. Bankruptcy attorneys are telling clients, specifically low-income African-American clients, that they only have 1 choice for filing bankruptcy and that is Chapter 13. The reasons for this are numerous, but one of the most concerning reasons is that low-income bankruptcy filers do not have to pay as much up-front for a Chapter 13. What their attorney isn't telling them though, is that Chapter 13 may cause more problems for them farther down the road. Sure, it might be "cheaper" in the beginning, but attorneys (particularly in the South), are neglecting to tell these clients how the rest of the Chapter 13 process works. They are not informing the clients about monthly payments that MUST be made, nor are they telling them about the risk of dismissal and how their debts might not ever be paid off if those payments are not made. Chapter 13 is typically used to stop a foreclosure or a vehicle repossession, and it is very effective in those situations. Telling low-income clients to file a 13 simply because it's cheaper up-front is shady and somewhat dishonest.
Now, most attorneys probably are not deliberately misleading their clients. They are trying to help them get relief as quickly as possible and try to stop the creditor calls without the client having to pay a lot of money. However once the calls stop coming and the debtor has achieved some measure of relief, often they cannot afford to make the monthly payments that Chapter 13 demands. They start missing payments or stop making them altogether. Within weeks (or months if they are fortunate), the case will be dismissed and the calls will simply start up again. The creditors have not been discharged and they have now added months of unpaid fees to the balance that already existed. Now the client is right back at square 1, and sometimes worse-off than when they started the process.
At Hampton Roads Legal, we are very careful to explain every single option to you. If Chapter 13 is the best route for your situation, we will tell you that. If Chapter 7 is the better route, even if it may cost more in the beginning, we will tell you. But that is just our attorney's expertise. Attorney Pfeiffer makes it her goal to give you every possible action for your circumstance. In some situations, Chapter 13 might legally be your only option, which she will explain. However if Chapter 7 is at all possible for you, she will give you that information even if it might not be the BEST option. That decision will be up to you.
This is how we practice, and this is what is fair. Do not let another attorney bully you into filing Chapter 13 if you feel your income is low enough for a Chapter 7, and you don't have any urgent matters to stop, such as foreclosure or repossession. If you are hesitating to trust your attorney, get a second opinion. This is also why we offer a free consultation at the very beginning. You deserve to know all your options and make the best choice for your family and your future.
Call us today to find out about the next available appointment time at 757-320-2010 or fill out our contact form and explain a little about your situation. We will reach out to you as quickly as possible!