Can You Pay Bankruptcy Attorneys with Credit Cards?
It’s common for debtors to wonder how they can afford to pay a bankruptcy attorney if they are filing for bankruptcy. With Chapter 13 bankruptcy, while the fees could be as much as double or triple the amount of a Chapter 7 bankruptcy, there is flexibility. With Chapter 13 bankruptcy, some attorneys agree to get paid through the bankruptcy plan. However, that option is not available with Chapter 7 bankruptcy. This post will focus on whether credit cards can be used to pay for a bankruptcy lawyer as well as issues with the bankruptcy trustee.
By Alexander Hernandez, J.D., Professor, and Author of Consumer Bankruptcy Law (Routledge).
Updated on March 14, 2025.
Updated on September 28, 2025.
Listen: The Professor’s Audio Briefing
Key Points:
- A bankruptcy attorney should never advise a debtor to get into more debt in order to qualify for bankruptcy.
- Using credit cards before filing for bankruptcy is a red flag for the bankruptcy trustee.
- The bankruptcy trustee can object to the bankruptcy and even accuse you of bankruptcy fraud.
- In Chapter 7 cases, attorney’s fees must be paid prior to filing for bankruptcy.
- In Chapter 13 bankruptcy, attorney fees can be paid through the plan.
Introduction: The Short Answer
It is common for debtors to wonder how they can afford a bankruptcy attorney while filing for financial relief. While Chapter 13 bankruptcy offers flexibility (often allowing fees to be paid through the bankruptcy plan), Chapter 7 requires attorney’s fees to be paid prior to filing.
This raises a critical question: Can you use a credit card to pay your bankruptcy lawyer? While technically possible in some scenarios, doing so is a significant red flag for the bankruptcy trustee and could lead to accusations of fraud. A reputable bankruptcy attorney should never advise a client to incur more debt to qualify for bankruptcy.
Key Legal Conflict: The Law Firm as a “Debt Relief Agency”
This issue has been directly addressed by the U.S. Court of Appeals in the Eleventh Circuit (in Cadwell v. Kaufman, Englett & Lynd, PLLC). The court had to analyze two issues, starting with the restrictions placed on bankruptcy lawyers.
Under U.S. Bankruptcy Code §526, bankruptcy attorneys are considered Debt Relief Agencies. This section imposes a critical restriction on the advice we can give clients:
Section 526(a)(4) explicitly states that a debt relief agency shall not “advise an assisted person or prospective assisted person to incur more debt in contemplation of such person filing” for bankruptcy protection.
This statute makes it unethical and illegal for a lawyer to suggest a client get into debt—whether by taking a cash advance for fees or buying a new car—just to meet eligibility requirements. If your attorney suggests this, it is time to find new counsel.
The High-Risk Scenario: Using Available Credit
The most common scenario leading to trouble is when a client, knowing they plan to file for bankruptcy, attempts to “use up” their available credit limit. For example, using a $2,500 available limit for attorney fees or a vacation just before filing.
This is a major concern because the bankruptcy trustee will immediately look for signs of fraudulent intent. The common situation where an attorney unethically advises a client to buy a new car to increase expenses and pass the Chapter 7 means test is also heavily scrutinized. Trustees routinely ask about the timeline of these transactions, comparing the date the car was purchased to when the lawyer was hired.
Paying Attorney Fees with Credit Cards: The Trustee’s View
The second issue addressed in the Cadwell case was the direct question of using a credit card to pay for bankruptcy attorney fees.
When you charge legal fees to a credit card shortly before filing for bankruptcy, you are creating a new debt (the fee) that you fully intend to discharge. From the Trustee’s perspective, this may be interpreted as a fraudulent transfer or fraudulent use of credit.
A better rhetorical question for clients is this: If you are comfortable charging $1,500 for legal fees, why not charge $3,000 or $6,000 to max out your limit? The answer is simple: The intent to discharge debt that was recently incurred is a significant legal risk.
When to Stop Using Your Credit Cards
While exceptions exist, the general rule is that a debtor should stop using credit sixty to ninety days before filing for bankruptcy.
Your bankruptcy attorney must be made aware of any recent credit card use, including:
- The amounts charged and when.
- What was purchased with the credit cards?
- The history of payments made.
Failure to advise your attorney could lead, at a minimum, to the bankruptcy trustee objecting to the discharge of your debts, or, in more serious cases, to allegations of bankruptcy fraud.
You can learn more about filing for bankruptcy and the bankruptcy petition via this link. Information on the bankruptcy court system, contact information for trustees, and your state’s exemptions can be found here. The federal bankruptcy exemptions are listed here. The latest version of the 341 Meeting of the Creditors can be found here.
About Alexander Hernandez: Professor Hernandez is an attorney specializing in consumer finance and debt relief. He is the published author of Consumer Bankruptcy Law (Routledge Publishing) and teaches law and finance in both English and Spanish for an international university.
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Colleges and universities can purchase my bankruptcy law textbook directly from Routledge Publishing. For paralegals and students buying single copies, you can do so via Amazon Books. To access my YouTube channel, click this link.
Please note that the information on this site does not constitute legal advice and should be considered for informational purposes only.
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