I see this question asked a lot out there in the internet. The short answer is that it depends. There are many different types of bankruptcy law firms, just like there are many different types of people. Then there are also different types of bankruptcies. Before we get into attorney’s fees for the different bankruptcies and the methods used to by attorneys to come up with fees we must first look at clients and law firms.
Some law firms are fast. Some law firms give personalized attention. Other firms have more experience. Then there are low budget firms, paralegal services and so on. The idea of attorney’s fees really becomes the client’s valuation for the fees that they are paying. Is it valuable for the case to move faster? Does the client want their attorney to answer the phone? Is a client willing to pay less to interact with only paralegals and never see the attorney until the court hearing?
When you are looking for a bankruptcy attorney, or any attorney or professional service, these are the questions you should be asking. What do you value most in the bankruptcy attorney or professional? One thing is for certain, you probably won’t get everything for discounted prices. Like a television, if you want all the bells and whistles, the attorney’s fees tend to drive up.
However, this doesn’t mean it is impossible to “find a deal.” There are attorneys out there with years of experience and the know how to be fast and provide the attention you need without the high fees. There fees might be less because these attorneys have found ways to run their firms efficiently, while saving costs. There are firms that have gone paperless, or learned how to use technology effectively to speed up the process.
Again, these are questions you should be asking your attorney. Questions like, “Can you tell me the bankruptcy process as well as YOUR process in preparing the documents necessary for bankruptcy? Who will I be talking to with when reviewing my bankruptcy petition? Can I email you documents? Do you know how to merge documents on Adobe? How many people touch my file before they are filed with the Court? Do you work on weekends? Will I only be talking to you? How many people work here? How many cases do you file a month? Can you show me examples (show me the proof)?”
If you are diligent and take your time, you will find the right attorney at a reasonable price.
Attorney’s Fees for Bankruptcy
Now that we discussed how to choose your attorney and the fees that might be associated with the type of attorney you choose, it is time to explain how most attorneys determine the fees for your bankruptcy case.
Remember, you have probably heard this before, not all cases are the same. Every case is different. Like attorneys and people, everybody’s financial situation is different. The cost of bankruptcy is most commonly affected by the “complexity” of your case. In other words, your financial situation dictates the attorney’s fees you will pay to file for bankruptcy.
At the bottom, bankruptcy attorneys will charge their lowest fees for people who are on a fixed income (such as social security income), have no home, no car payment, no spouse, no dependents, no equity and little to no assets. Some attorneys will also put the amount of debt you have into their calculation of fees. On the other hand, bankruptcy attorneys will charge more for clients who are married, own businesses, have one or more pieces of real estate (such as homes, land and time shares, etc) and have other assets or equity that would require more attention to protect.
If you are working, you will generally pay more than people who are unemployed or on a fixed income. This is due to the fact that the attorney has to calculate your income. This might sound simple, but if you have heard of the “means test,” or calculating “schedule I,” you will understand that it’s just…more work.
Chapter 7 Attorney’s Fees
What about the attorney’s fees for different Chapters in Bankruptcy? Yes, the fees are going to be different as well. In a Chapter 7, the fees will be determined by most of the factors I described above. However, keep in mind that you will have to pay the Court filing fee, which tends to be more than a Chapter 13. Additionally, there are two classes (normally online) that you have to take. Below are some other possible fees that you should discuss with your bankruptcy attorney:
- Filing Fee
- Credit Counseling Course
- Debtor Education Course/Financial Management Course
- Credit Report
- Appraisals on your home and other real estate
- Tax Transcripts
- Copies / Mail
- Court motions
Chapter 13 Attorney’s Fees
Like a Chapter 7, many of the attorney’s fees and costs above are incorporated into a Chapter 13. A Chapter 13 requires more attention from an attorney as well as more work. The attorney must go to additional hearings in a number of cases and they must prepare your Chapter 13 plan. This requires reorganizing your debt and distributing payments to your creditors.
However, Chapter 13 cases are normally governed by the Court. Because of this, attorneys from the same district will tend to all charge nearly the same amount for Chapter 13 cases. However, keep in mind that you can negotiate the upfront fees of a Chapter 13. In the end the attorney will be paid the same amount. More importantly, the remainder of the fees will be taken out of your Chapter 13 plan payments. These are payments that you would have gone to your creditors. Instead of the money going to your creditors it will go to your attorney. Therefore, when looking for a Chapter 13 attorney, it is beneficial for you to find the attorney that fits your value added needs because you will most likely pay the same, or nearly the same, amount to every attorney you find. More importantly, they will be there with you for the length of your Chapter 13 plan.
To conclude, I just want to reiterate that finding an attorney should take some time. Yes, there are emergency situations where you have to file a bankruptcy as soon as possible. However, many attorneys will provide a phone consultation. It is always good to talk to a few attorneys to find one that fits your needs and values at the right price.