Filing for bankruptcy, to many, can seem like an extremely scary event. It can often give off the impression of having completely run out of money, and declaring bankruptcy is the last-choice option to digging oneself out of debt. In some instances, however, filing for bankruptcy can actually be a good thing. In the long run, it may even save you time and money, depending upon your financial status and eligibility.
If you decide to file for bankruptcy, it’s a good idea to hire an attorney that specializes in financial and bankruptcy law. A bankruptcy lawyer will ensure that you not only file correctly and for the right type of bankruptcy, but can even save you money down the road.
Depending on the type of bankruptcy you’re filing for, a bankruptcy lawyer will usually first consult with you about your case, and whether or not filing for bankruptcy is right for you. Following this conversation, often he or she will go over the options available – bankruptcy or otherwise. If filing for bankruptcy seems like the right fit, your attorney will go over which type of bankruptcy applies to your situation and will complete all the correct filing to start the process, as well as represent your interests in court.
Depending upon the services offered, the type of bankruptcy you’re filing for, and where you’re filing for bankruptcy, fees for bankruptcy attorneys will often differ. Below, we will go over the different types of bankruptcy, and the average cost of an attorney specializing in that type of law.
Typically, bankruptcy attorneys will usually charge their clients at a flat rate, meaning that you will pay your attorney a fixed price for their services, regardless of the time it takes for the attorney to work through your case. Some attorneys, however, charge clients on an hourly basis. Before deciding on an attorney, it’s important to look over your contract and confirm which pricing scheme your bankruptcy attorney plans to use.
In bankruptcy cases, attorneys must disclose the amount they charge their clients for their services to the applicable court. Following this disclosure, the courts must approve of the fee/amount your attorney is charging you for his or her services. In many instances, courts will even impose a maximum fee that attorneys cannot surpass when charging their clients. So, rest assured, regardless of your choice in attorney, you will be protected from overpaying for any bankruptcy services!
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Average Chapter 7 Bankruptcy Attorney Fees
Chapter 7 bankruptcy involves the collection and sale of your nonexempt assets to cover your debt. How much your lawyer will charge for this service, as well as any consultation they may do with you beforehand, largely depends on how complicated your case is, what kind of firm they are coming from, and the size of the city you live in.
Typically, if an attorney is charging their clients by a flat rate, pricing can vary from between $1,000 to $3,500. Whereas an experienced attorney will often charge more, newer attorneys usually charge a lower flat rate.
Average Chapter 13 Bankruptcy Attorney Fees
Chapter 13 bankruptcy differs from Chapter 7 bankruptcy in that it does not require the liquidation and sale of nonexempt assets to cover your debts. If you have a job with a regular income, a bankruptcy attorney can help you apply for a Chapter 13 bankruptcy, which involves the creation of a repayment plan over a three to five-year period.
Another benefit of filing for a Chapter 13 bankruptcy is that a majority of courts across the country have a guideline for attorneys that sets “acceptable” fees they can charge their clients. This means that regardless of the amount of time your attorney spends on your case, the court will limit the amount you have to pay him or her. However, fees for filing for a Chapter 13 bankruptcy tend to run higher than other filings. Depending upon the same circumstances (complexity, firm, and city size), rates attorneys will typically charge their clients range from $2,500 to $6,000.
Average Bankruptcy Attorney Fees for Other Services
There are several other services that a bankruptcy attorney can provide for you that may or may not be included in the overall fee agreement that you sign when you decide on an attorney.
It’s extremely important to be aware of the costs that come with filing for bankruptcy, such as the filing fee jurisdictions charge, converting from one type of bankruptcy to another, court appearances, and more. It’s also vital that you research other services that an attorney provides that can help you through your bankruptcy and put you back on your feet, once the dust settles. Many offices provide court required classes – things like credit counseling, financial management courses, and generalized financial education courses.
Filing Fee and Process
Luckily, filing fees for bankruptcy cases are identical throughout the country, so you never have to worry about getting overcharged for a bankruptcy attorney filing a case on your behalf. The cost of filing a Chapter 7 Bankruptcy case is $335, while the cost of filing a Chapter 13 case is $310. This differs from pro se costs – if you decide to represent yourself through bankruptcy proceedings, costs for filing can range between $350 and $450 dollars. Additionally, in many instances, the success rate of cases where a debtor represents themselves is low.
When an attorney takes care of filing for you, they will ensure that they are following the correct laws of your jurisdiction, submitting all of the proper paperwork, are actually filing for the correct type of bankruptcy, and generally starting the legal process that will help you eliminate – or at least reduce – all your debts.
If you hire a bankruptcy attorney to help you through this process, they will typically compile all relevant financial records and submit them to the courts, which has the added benefit of helping you better understand your financial situation. Hiring an attorney will make sure that you don’t miss any filing deadlines, which could result in a delay or complete dismissal of your case – meaning that your debts will continue to plague your financial portfolio.
In the filing stage of this process, an attorney will also help to establish which debts can be discharged – meaning you won’t have to pay them – and which cannot. When it comes to Chapter 7 Bankruptcy, they will also help go through your assets to figure out which to liquidate to pay off your debt. While it’s not required to hire an attorney to file or represent you in a bankruptcy case, legal counsel can certainly help throughout this process, especially in the preliminary stages, when you’re still trying to figure out what works best in regards to your financial situation.
Credit Counseling Fee
Courts require those considering filing for bankruptcy to undergo credit counseling. Within 180 days before filing your case, all potential filers must receive credit counseling. An approved provider – which is oftentimes supplied by your attorney, should you chose to hire one – will go through your finances and attempt to establish a budget plan that will help you avoid bankruptcy. Usually, these counseling sessions last for around an hour, and can be done over the phone, live, or in-person. Typical rates for this type of service average around $50.
Debtor Education Course
Debtor education courses are required for those who have filed for bankruptcy, before their final debts are discharged. It is a way for the courts to ensure that, should you need to file for bankruptcy, it’s unlikely that you’ll need to do it again in the future. In these courses, you will be educated on financial management strategies, including practices like developing a budget, managing your money and finances, and using your credit responsibly. Costs for these services range between $50 and $100, depending on the complexity of your finances, where you live, and what type of bankruptcy you are filing for.
When deciding if filing for bankruptcy – and hiring an attorney in general – is the right decision for you, make sure you do your research. Many bankruptcy attorneys will offer free, initial consultation services, where the attorney will go through what the bankruptcy process looks like, how much it may cost you upfront, and how much it could save you in the long run.
Essentially, depending on the type of bankruptcy that you file for, the overall cost to you throughout the process of a bankruptcy case can range from $1,500 to $6,000. While this may seem like a significant amount of money, in comparison to the debt weighing on you, in filing for bankruptcy, you would be paying much less than you otherwise would, should your debts not be forgiven!
