If you’re looking at filing for bankruptcy, then it goes without saying your finances are already a stressful issue. That means that the thought of paying a lawyer to help you file for bankruptcy is probably even harder to manage. But the truth is that having an attorney to guide you through the process and ensure everything is done properly can end up putting you in a better financial position for the future, meaning it’s worth making that investment up front.
How much should you expect to pay, and when? Here’s a brief overview of what to expect when it comes to paying a bankruptcy attorney:
Paying for Your Chapter 7 Bankruptcy
Chapter 7 bankruptcy is a straight liquidation of your assets that will wipe out your unsecured debts (credit card bills, medical bills and so forth). Most attorneys base their fees for overseeing this type of bankruptcy on how complicated your case is. The more assets you have, the more likely you are to end up paying a higher fee. Fees may also vary based on factors internal to a firm, such as the advertising costs often incurred by larger law firms.
Because fees also vary by region, the best way to ensure you’re getting treated fairly is to call around and ask for multiple quotes. Although a few attorneys might charge by the hour for bankruptcy cases, most will charge a flat fee that could range from a few hundred to a few thousand dollars.
Paying for Your Chapter 13 Bankruptcy
Chapter 13 bankruptcy reorganizes, rather than wipes out, your debt. That means you pay it off in a structured plan over time. The reason that people choose this kind of bankruptcy, however, is that it allows you to keep assets such as your house and car. The fees for Chapter 13 bankruptcy are generally limited by the court and shouldn’t be more than $5,000 or $6,000, although a law firm may charge more if they demonstrate to the local court why they need more to handle your case.
In most situations, you won’t need to pay that full amount up front, however. In general you’ll pay about half up front, and then the remainder will be included in your court-structured repayment plan.
A Note on Finding the Right Attorney
Remember, of course, that choosing the right bankruptcy attorney is key — not everyone with the title “attorney at law” will have the specific experience to get you the best possible deal in your bankruptcy settlement. That means it’s worth paying slightly higher fees to work with the best law firms. And since attorney fees need to be disclosed to and approved by the court in most bankruptcy cases, even the top law firms won’t be able to actually overcharge you. Ask about any prospective attorney’s specific experience with situations like yours, and don’t leave any consultation without asking this important question: “What can you help me with that another bankruptcy attorney can’t?”
Do you have questions or comments on hiring a bankruptcy attorney? Join the discussion below.