How Much Do Bankruptcy Lawyers’ Charge?
If you’re considering instructing an attorney to file a bankruptcy petition and to represent you in a case, it’s important to note how much your bankruptcy lawyer’s fees will be.
While the courts have local rules and guidelines in place with respect to bankruptcy fees, attorneys are not obliged to set their fees according to these guidelines. However, if attorneys chose not to base their fees based on the guidelines, their fees may be subject to review by a court, if their fees exceed the guideline amount.
Depending on the complexity of your case, many bankruptcy attorneys charge a flat fee for simple bankruptcy cases, while others may charge an hourly fee.The due date for payment of attorney fees largely depends on whether you file for Chapter 7 bankruptcy or a Chapter 13 bankruptcy
What Are Chapter 7 Bankruptcy Lawyers’ Fees?
With respect to Chapter 7 bankruptcy, the majority of attorneys will charge fees based on the complexity of your case and the average costs that attorneys in the area would charge to handle a similar case. If you have a substantial amount of assets or your income is higher than the state median for a similar household, you will generally have to pay more in attorney fees than an unemployed person with no assets.
Depending on the complexity of your case, fees for Chapter 7 bankruptcy range between $500 to $3,500. Naturally, larger firms with more advertising and overhead costs may charge more than a one man firm. Further, more experienced attorneys generally charge more than newly qualified attorneys. However, if your case is fairly simple, you may not require an attorney with years of experience. Comparing attorney fees in your area to find out how much they would charge for your case may be a useful way to find out the costs, you might also want to ask them if bankruptcy is an area of law in which they specialize and the number of cases they file each month.
What Are Chapter 13 Bankruptcy Lawyers’ Fees?
The majority of courts have guidelines for attorney fees for a Chapter 13 bankruptcy. Unless the circumstances of a case justify it, attorneys are not permitted to charge more than the courts guideline fee.
The fee guidelines vary in each judicial district. Generally, the fees are between $2,500 and $6,000, depending largely on whether you are an employee or have your own business. A major perk of a Chapter 13 bankruptcy is that you do not have to pay all your attorneys fees upfront, as a portion of your attorney fees may be included in the payment plan.
Generally, most attorneys will ask for a portion of their fees before they file your case and the remainder will be paid through the payment plan. The amount an attorney will require upfront will depend on the individual attorney; however, you can expect to pay about half the total fee before your case is filed.
Bankruptcy Lawyers’ Fees: Flat Fees as Opposed to Hourly Fees
A lot of attorneys will charge a fixed fee to represent you in a bankruptcy case, irrespective of the amount of time the attorney actually spends on your case, this is known as “flat rate” fees.
On the other hand, some attorneys may charge you on an hourly basis. However, this is not common in consumer bankruptcy cases. It is likely that an attorney will charge you a flat rate fee for the majority of your case, and may charge you on an hourly basis for any extra work required for services such as defending against an objection to discharge.
When You Must Pay Your Bankruptcy Lawyers’ Fees
This depends on the Chapter you file your bankruptcy case under. With respect to Chapter 7 bankruptcy, generally attorneys will require their fees upfront before they can file your case, because you get rid of most unsecured debt in a Chapter 7 case, which means any debt for attorneys’ fees will also be eliminate. Whereas with Chapter 13, since your debts are paid off within 3 to 5 years, a portion of the attorneys fees are included in the payment plan, but the attorney may require the remaining portion (portion not included in the payment plan) to be paid upfront.
In some circumstances, an attorney may allow you to pay some or all of their fees through the Chapter 13 payment plan. You may negotiate with your attorney as to how the fee will be paid.
Are Bankruptcy Lawyers’ Fees Always Fixed by The Court?
Fees of attorneys in bankruptcy cases are unique in that they must be disclosed to and approved by the court. This does not mean that the court fixes attorney fees, but merely provides local rules and guidelines with respect to fees. Thus an attorney is free to charge a reasonable fee in light of their experience and complexity of your case, subject to review by the court. A few courts have a presumptive maximum fee for specific types of bankruptcy cases, but if an attorney can justify the charging of a higher fee, then the court may allow the fee.