How Much Does a Bankruptcy Lawyer Cost?
No Set Price
While it would be convenient to know exactly how much it will cost you to hire a bankruptcy attorney, there are many variables that are involved that will impact your costs. For example, your cost will be different if you file Chapter 7 bankruptcy than for Chapter 13. As part of your bankruptcy agreement, you may have to pay to take a credit counseling course, even if you use an attorney, which adds to your costs.
You are able to file bankruptcy on your own, which will save you money at the outset, but it's important to realize that self-filing has a low success rate for bankruptcy. In Los Angeles alone, nearly twice as many self-filed Chapter 7 bankruptcy cases were dismissed compared to those that were filed with the help of a lawyer. In contrast, the success rate for attorneys filing a Chapter 7 bankruptcy case is over 95%, which may be reason enough to hire one.
Costs to File Bankruptcy
If you decide to file bankruptcy yourself, the fees are already known. The Chapter 7 bankruptcy filing fee is $335 and the Chapter 13 bankruptcy filing fee is $310. A credit counseling course will add an additional $20 to $100 to the bill, bringing your total costs to no more than $435, if your credit counseling course is expensive. On the low end, you might pay as little as $330 for a Chapter 13 bankruptcy and low-cost credit counseling course.
Given the low success rate of self-filed bankruptcies, you should note that if your case is dismissed, you do not get your filing fee back. Therefore, you will be out at least $335 and still not have a resolution to your financial problems. In fact, you might have to hire a bankruptcy lawyer at this point anyway. You won't have to pay for the credit counseling course if your case is dismissed, but the filing fee is gone for good.
Cost of Hiring a Bankruptcy Lawyer
The filing fees do not change when you hire a bankruptcy lawyer, so a Chapter 7 bankruptcy will still be $335 and a Chapter 13 bankruptcy will still be $310. However, you will also pay attorney fees, which pay for the services your lawyer provides. This includes things like ensuring your bankruptcy paperwork is filed properly and that all deadlines are met, counseling time, trial time, negotiations, experience, experts (if necessary), and other services.
As with the filing fees, the amount an attorney charges for their services depends on the type of bankruptcy you end up filing. Remember that Chapter 7 means that your debt will be fully discharged and Chapter 13 means that you are setting up a long-term payment plan to repay your debts over time. Each chapter's attorney fees are broken down a bit in the next few paragraphs, but they will also vary based on location and case complexity.
Chapter 7 Bankruptcy Attorney Fees
To file Chapter 7 through an attorney, you will be required to pay your attorney fees upfront before bankruptcy is filed. The average cost of a Chapter 7 bankruptcy in the United States is $1,250, but you may pay more if your case is particularly complicated or you live in a major city. With a Chapter 7 bankruptcy, you are required to surrender your non-exempt property to the bankruptcy court, which is then sold to pay down your debt.
If you do not have a lot of non-exempt property and you're filing a "no asset" bankruptcy, your costs will be significantly less than if you have many assets that have to be listed and then sold. The more complicated case you have, the more likely it is that it will go to court, which is why the attorney will be seeking more money upfront. Additionally, having more assets also means more negotiation on your attorney's part as well.
Chapter 13 Bankruptcy Attorney Fees
In a Chapter 13 bankruptcy situation, you will work with the bankruptcy court to establish a payment plan for your debts, which will usually last between three and five years. At the end of the payment term, your remaining debt will be discharged. The average cost of a Chapter 13 bankruptcy in the United States is $3,000, but this amount varies widely based on what is considered "presumptively reasonable" attorney fees in a city or region.
For example, in some areas, the presumptively reasonable attorney fee is $3,500 plus up to $1,500 more based on complexity. In other areas, the fee is $2,750 and the attorney cannot add additional fees for complex cases without the court's approval. You'll probably have to pay some of this fee upfront, but the rest can be included in your Chapter 13 payment plan. This is more expensive than Chapter 7 because of the extra work involved in negotiations.
Fees Are Public
The fees that your attorney charges in bankruptcy cases are available to the public, as they are legally required to disclose them. These fees are available on the federal PACER website, but you'll need to pay $0.10 per page view. This is an excellent tool to determine the going rate for bankruptcies in your city or region or to check out what a specific law firm is charging for handling bankruptcy cases.
Attorneys are also required to disclose their fees on the Statement of Financial Affairs for your case, which will include all payments made on behalf of the debtor for the year preceding the start of your case, including those made to an attorney. Your city or state may also require additional disclosures, but at a minimum, you can find the costs for your attorney in these two places.
Other Possible Bankruptcy Fees
Most bankruptcy cases are straightforward and uncomplicated, so you can expect to pay approximately the averages stated above if your case is in the majority. However, when it comes to how much does a bankruptcy lawyer cost, you will want to consider if it's at all a possibility that your case will need to be litigated because this is the biggest complication there is in a bankruptcy case. To prepare a defense, an attorney will likely tack on additional fees.
If your case becomes adversary, meaning a creditor believes you have committed fraud or failed to disclose records, this will require even more time in court and could end up costing you more than $10,000. However, you don't want to face that type of situation without an attorney, so if it appears that your case may be headed for the courtroom, the fees you pay your attorney will be worth the work your attorney does on your behalf.
The cost of a bankruptcy attorney really depends on your specific case and how complicated it may or may not be. Call or email Stockton & Kandt, LLC today to schedule a consultation so we can discuss your needs and provide you with a roadmap out of your financial situation. We'll explain all fees and services so that you can feel secure with our representation.