Paying Attorneys While in Bankruptcy

Hello, this is Roger Ghai, and I wanted to speak this morning a little bit about whether you can pay your attorney’s fees and the court filing costs by using credit card. So the question arises a lot of times is that the client, you don’t have… You’re filing a bankruptcy or contemplating filing a bankruptcy and you can’t pay $2,000 on the typical case, which would include the filing fee or nearly $2,000 to file a bankruptcy case. So what do you do? Can you use your credit card to file a bankruptcy case? This question really invokes a very interesting bankruptcy rule. The rule is this that, if you file or charge anything, let’s say for example, on your credit card, within 60 days of your bankruptcy filing. Now, the old rule used to be 90 days, but the relatively new rule is 60 days.
If you file a charge, I should say, anything on your credit card within 60 days of your bankruptcy filing of the petition. There’s a presumption in the law that that debt is non-dischargeable. So you could be, for example, within 60 days of filing of your bankruptcy case, you can be going to the Kroger, or the Publix, or the gas station and charging things up. Or at the Coles or at the shopping mall and charging things up on your credit card. So if you charged up, let’s say for example, $1,000, $1,500, $2,000, within 60 days of filing of your bankruptcy case, then the creditor could go ahead and file a complaint and say, “You know what? This person wasn’t acting in good faith. They knew that they were going to file a bankruptcy case. They charged a lot of things up and so that should be non-dischargeable.”
That is a presumption in favor of the creditor. Now, as with all presumptions, the presumptions can be rebutted. But the problem is, if you have to pay a lawyer to go ahead and spend extra time and effort to rebut a presumption, you’re going to end up paying that lawyer a lot of money. So to get back to my initial question that I was trying to address with everyone, can you pay your attorney fees by using a credit card? The answer is, you might escape by doing so. In other words, as a practical matter, knock on glass here this morning, I have had clients who have used their credit cards to pay the attorney fees and the court filing fee on their credit card. And I’ve advised them that if they do that, there’s a possibility the credit card company will come back to them and say, “Look, this charge for your attorney fees was charged within 60 days of filing the bankruptcy case. And so we’re going to make a demand on you that this charge be repaid in the bankruptcy.”
We found several cases where the client did in fact use the… They had enough left on their credit card. And so they ask me to charge the attorney fees on the credit card, and they were not asked by the credit card company to repay the attorney fees or the court costs. So in a sense, they actually obtained a “free bankruptcy,” but again, I’m not number one, advocating that you do this. So I want to make sure that you’re not taking this as a, given the green thumbs up and saying, yes, you should go ahead and use your credit card to file the bankruptcy and you’re going to get a free bankruptcy because it very well may not work out like that. But the decision is yours as to whether you want to run that risk or not. So if you have questions about payment of your bankruptcy attorney fees and you don’t want to use your credit card, that’s perfectly fine. We do have payment options available for you. So just call my office at 770-792-1000 to see what your options are.