A client visited my office yesterday to discuss filing a MA bankruptcy case. He had no savings and very little money in his checking account. The client had a 401k with over $25,000. He had numerous credit card bills with balances totaling over $40,000 with regular monthly payments over$1,000. He had a wife and child and income of less than $50,000. This client was a perfect example of someone who should file Chapter 7 bankruptcy. His concern was how he could pay me to file the case. I had a few suggestions.

The obvious answer is to stop paying the credit cards entirely and take any saved money to apply to paying the bankruptcy attorney. In my client’s case, we looked at his credit card situation and discussed each obligation separately. I was able to advise him he could stop paying all of them immediately without harming his Massachusetts bankruptcy case.

Another option often open to people is their income tax refunds, and now their stimulus checks. If these payments haven’t been received they can be targeted for use in paying for the bankruptcy filing.

Never take money from a credit card to pay for the bankruptcy. And no, you can’t charge the bankruptcy! If you have supportive family or friends they can be a source of funds.

I rarely advocate taking money from retirement accounts, but it may be appropriate to do so only to file a bankruptcy case, especially where the filing is needed to stop a foreclosure on a home. This source of funds should be a matter of last resort.

In any event, always look at the big picture – what little you are paying to obtain such a huge debt relief.