A good bankruptcy attorney should never “sell” bankruptcy. That is not why people come to my office. What they want and need is honest advice about how to get out of debt. Bankruptcy is a powerful tool to eliminate debt, but there are other methods to solve the debt problem. At the first meeting with a client the attorney should spend a lot of time outlining the debt problem and then organize the possible solutions. I think what people are looking for when they meet with their attorney is somebody who can look at their problem from the outside and give them an honest assessment of what they should do.
So, how do you know if bankruptcy is the right answer to a debt problem? Well, the best answer to that question is to ask the following: If you are not filing bankruptcy, how much will it cost each month to really get out of debt?
A good rule of thumb is to divide the total debt by 48 months and then ask yourself if you can make that payment for the next 4 years. For example, if you are $12,000 in debt, can you afford to pay $250 per month to avoid bankruptcy? If you are $20,000 in debt, can you afford to pay $417 per month? This is not an exact calculation because you have to factor in interest, but it is a good estimate of what you must pay to really get out of debt. If you know in your heart that you cannot afford that payment, then consider filing bankruptcy. I call this the Rule of 48.
There are many fine institutions that help people avoid bankruptcy by establishing a Debt Management Plan, such as Consumer Credit Counseling Service of Nebraska (www.CCCSN.org). However, you must make sure that the program pays ALL of the debt, not just a few select credit card balances. It seems like I see a lot of folks using a credit counseling service for some of the debts, but then they are being garnished for the debts not covered. To avoid bankruptcy you must pay all debts, not just some of them.
A good bankruptcy attorney should help their client identify all the possible solutions to the debt problem. The initial consultation should be free, and nobody should try to “sell” you a bankruptcy.