Bankruptcy Law Passed in 2005 Leaves Some Debtors in the Shadows

Those who cannot afford the cost of bankruptcy wind up in a shadow economy, or informal bankruptcy situation. It is a strange state of affairs, brought on by the failing economy.

Whether you know it or not, there are people who need to file bankruptcy because they can no longer handle their debt load. They need to file for relief, but they do not have the money to pay the lawyer. They need cheap bankruptcy because today’s costs are going up exponentially, with no apparent end in sight.

Thanks to the economy and a 2005 law passed to make filing for bankruptcy even more difficult, there is a new group of debtors referred to as the unofficial bankrupt debtors; the people who are all but bankrupt but couldn’t afford the lawyer’s fee to make it official. Many of these people refer to themselves as too poor to go bankrupt. The latest figures indicate that only a small portion of those in real financial trouble can afford to file and do so. The rest languish in the shadow economy, unable to move forward with their lives and on hold financially with their hands effectively tied.

All of this begs the question: why are so many lawyer’s fees so high that people cannot afford to pay them to be able to file for bankruptcy? The hike in fees largely has to do with the law passed in 2005 that made things harder to file and added on more paperwork and forms. This increased the time a lawyer had to spend to assist a client and thus, up went the fees.

In this current economic crunch, it would make more sense for lawyers to charge smaller fees and help people get their lives back on track. There is no shortage of needy debtors who would pay a lesser fee for financial relief. It is almost bizarre to think that a debtor in desperate financial straits needs to save up to go bankrupt. Informal bankruptcy does not just impact on the person who cannot file because they cannot afford it; it affects everyone because it impacts the national economy. Delaying filing bankruptcy is like putting off going to a dentist when your tooth hurts. Wait too long and the pain is worse and there are more problems.

One solution is to file pro se, and do it yourself. This can be a fairly risky and scary option if you do not know what you are doing and what the exemptions are in your state. You could use bankruptcy petition preparers for the paperwork, but without the eagle eye of a skilled bankruptcy lawyer, this is taking a huge risk that something could be missed. Is there an answer to this dilemma?

Yes, find a seasoned bankruptcy lawyer that completely understands what you are going through and does not charge you an arm and a leg to file for bankruptcy. Find one in Iowa that has one of the lowest rates for filing you will find; one whose service is based on a compassionate understanding that filing bankruptcy is something you have a right to do when you need to do it.

Kevin Ahrenholz is an Iowa bankruptcy lawyer and Iowa bankruptcy attorney. To contact him, visit https://www.iowachapter7.com or call 1.877.888.1766.