Home Bankruptcy What Happens When You Can’t Afford Bankruptcy?

What Happens When You Can’t Afford Bankruptcy?


It’s no secret that the courts favor those who can afford representation, and that many people are underserved when it comes to having fair and equal representation before the law in civil and criminal proceedings. Representation allows people who need it to access a level of expertise that can’t be obtained through Google, and have faith in those who have passed a grueling examination to attain some level of expertise. Years of practice goes into a variety of legal specialties, and bankruptcy is one of them. All of these advantages are lost when you look at your financial situation and decide that you can’t afford bankruptcy.

Recently, our founding partner won an important victory in federal court that allows us to reach underserved communities and provide them with access to legal expertise when it comes to bankruptcy. Historically, these underserved populations have been paternalistically herded into Chapter 13, the misleadingly called ‘keep your stuff’ bankruptcy when Chapter 7 would have been more appropriate. In practice, a Chapter 13 keeps those who can’t afford it bound to agreements and an onerous payment plan that they can’t make, moralizes, and all but stamps them for failure.

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Bankruptcy services are considered a civil matter though adjudicated in federal court. However, unlike criminal proceedings, petitioners are not provided with legal counsel by the system. This leaves a lot of people unprepared, relying on their own resources, or working with petition preparers and facing dismissal because they don’t know how to ‘play the game.’ It’s not a game, it’s other people’s lives and futures, not a billing statement with legs.

The Southern District of Florida’s US Trustee complained to Laurel M. Isicoff, Chief United States Bankruptcy Judge, that Van Horn Law Group and DebtStoppers were in violation because of ‘bifurcated fee agreements’ and options that allowed their clients to finance their bankruptcies with little or no money down for clients who can’t afford bankruptcy any other way.

Faith Based Events

The trustee’s complaint was multi-pronged.

  • The firms were overcharging post-petition – asking $1200 to $1900 for a bankruptcy to discharge according to the Finger Lakes Times. For the record, many ‘bankruptcy preparers’ charge much more than this for their services and cannot offer legal advice.
  • The ‘bifurcated’ agreement was structured so that the client signed one agreement before the bankruptcy petition was filed and another after for the services of the law firm.
  • The marketing of no or little money down Chapter 7 bankruptcy cases.

Judge Isicoff replied with a 41-page opinion that will doubtlessly help many people who could not otherwise access the services of a bankruptcy attorney for debt relief to do so. In doing so, the judge asked some key questions in the very first paragraph of her ruling.

  • Do such payment arrangements provide a partial answer to the systemic obstacles faced by under-privileged communities’ with regard to access to justice?
  • Do such payment arrangements violate the Bankruptcy Code?
  • Do such arrangements violate the rules of the Florida Bar?

The judge’s thorough and definitive opinion is that such arrangements do not violate the bankruptcy code, nor do they violate the rules of the Florida Bar. However, the ruling clarifies the methods of payment while promoting transparency with regard to what services are offered.

Understanding the Agreements

Low or no down, the agreements are handed over before the filing – one is the agreement to pay the filing fee if such is not waived under the means test. The second agreement is for the services provided after the filing, and the schedule of payments for the petitioner to the law firm for those services. The cost is one without interest, and the fees will vary with the services needed. We’ll make everything crystal clear for you, with no surprises for you or your recuperating finances.

Why We Do It

Denying people access to justice because of their finances is an act of injustice. It is discriminatory, and in a country where everyone is entitled to equal protection under the law, it betrays a basic tenet of our country. Our payment agreement may not right historical wrongs, but it can help to stop perpetuating them. Bankruptcy is a constitutionally protected right, and obstacles that impede that access are unacceptable. People do not need moralizing and paternalism when their circumstances are untenable; they need justice and access to that justice via the courts.

By allowing two-part agreements, Judge Isicoff extends the protection of the courts to those who most need it. People already wait until the situation is dire to file for bankruptcy, fearing the stigma, but to be shut out of access to relief because you can’t access an attorney is un-American.

Every Case is Different

Even when two people file for the same Chapter 7, there are so many factors in their individual circumstances. Tenancy by the entirety? Personal property? Mortgage versus rent? Retirement income? We do more than just file a petition, we offer individualized legal advice and assistance to get you the outcome you need to go on with your life. We don’t moralize, condescend, or judge – we help, counsel, and advocate for people who are already going through a rough time. We are prouder than ever to be able to help those who need us most.

We’re Still Ready to Help!

Since receiving his law degree in 2009, Chad Van Horn has shown his passion for serving the citizens of South Florida. Our offices in Miami, West Palm Beach, and Fort Lauderdale have filed thousands of bankruptcy cases, helped people with student loan debts, stopped wage garnishments, foreclosures, and more. We can help you with whatever debts you are facing, and get you started on the road to a debt-free life. Call us today and set an appointment for your free initial consultation! Don’t settle for a petition preparer, don’t settle for anything less than active representation and experienced attorneys working with your best interests at heart.