Beware “Too Good to Be True” Legal Advertising

Bankruptcy attorneys make many promises. Many of these promises are true, some are half true, and a few are not true at all. Today’s article will investigate whether a certain bankruptcy advertising promise is true, kinda true, or a lie. Specifically, the promise by an attorney to “start” a bankruptcy case for $100 (or $149, or $199, or $249, or $299). This sort of promise is common on Craigslist and weekly advertisement pages found at the laundry mat. Is it true?

What does “start” mean? Let’s start our investigation with a key word in the promise: “start.” The law is very clear about when a bankruptcy case “starts.” Section 301 of the Bankruptcy Code clearly states:

(a)   A voluntary case under a chapter of this title is commenced by the filing with the bankruptcy court of a petition under such chapter by an entity that may be a debtor under such chapter.

Consequently, a bankruptcy case is started (commenced) only when a petition is filed with the bankruptcy court. To find out if an attorney can start a bankruptcy case for only $100, let’s turn to the economics of the case:

Credit Counseling. An individual must complete a credit counseling class with an approved agency before he or she is eligible to be a debtor in bankruptcy. The typical cost for this class is around $50. A truly indigent person may qualify for a fee waiver. Waivers are reserved for the most desperate of situations, and when the attorney is working pro bono. Accepting $100 from the client will likely disqualify the person from a fee waiver.


Filing Fee. The court fee for filing a bankruptcy case is $306 (Chapter 7) or $281 (Chapter 13). Filing fees may be made in installments, not to exceed four payments within 120 days after the petition is filed. Conceivably, a debtor could apply to pay the court filing fee in installments and not pay anything (or $50) at the time of filing.

The debtor may also apply for a waiver of the filing fee, but the court will only approve a fee waiver if the debtor’s attorney is not paid for his or her work during the case.

Attorney Fees. Bankruptcy attorneys do not generally work for free. Accepting payments after filing for pre-bankruptcy Chapter 7 work violates the bankruptcy automatic stay and creates an ethical conflict because the attorney is a creditor. Debtors do not have to pay attorneys that make “under the table” deals to accept post-filing payments in Chapter 7 cases. Attorney fees are often paid in installments during a Chapter 13 case, although most attorneys require some money up front for pre-filing work.

Is the promise true or not? Probably not. This advertisement could be true if the attorney will file a fee installment agreement and accept attorney fees in payments during a Chapter 13 case. It could also be true in a Chapter 7 case if the attorney is representing the client for $50, pro bono, or agrees to accept a small post-petition fee and discloses the agreement to the bankruptcy court.

The truth is that the promise to “start” a bankruptcy case for $100 is often simply an offer to put that money into the attorney’s bank account and commence some kind of pre-bankruptcy work. This advertising is usually a bait-and-switch ploy, misleading at best, and unethical.

You may want to ask yourself: if an attorney advertises for clients using half-truths or outright lies, do you really want this attorney representing you in an important legal matter?

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