Bankruptcy attorneys assist individuals and businesses that need to file for bankruptcy. Filing may be for Chapter 7 (liquidation), Chapter 13 (repayment) or Chapter 11 (large repayment). Debt can include credit card debt, student loan debt, medical expenses, car payments, bank loans, back taxes or mortgage debt. Assistance is available whether or not clients have applied for bankruptcy in the past. Several factors affect the cost of hiring a bankruptcy attorney.
Geographic location can play a role in the cost of bankruptcy attorney fees. Regional market rates vary based on local competition, cost of living and more.
Experience and reputation
Lawyers with extensive experience, a well-regarded academic background and those who work for a highly reputable firm may have higher rates for filing bankruptcy claims than other lawyers who are just starting out or are not as well-known.
Some attorneys charge an hourly fee for filing a bankruptcy case, although more commonly, they charge a flat rate for this service. Hourly rates may come into play—on top of the flat fee—if the case is more complex than normal and the lawyer is required to do additional work.
Chapter 7 is the most common form of bankruptcy in the United States and requires the individual or business in question to turn over their assets and debts to a court-appointed bankruptcy trustee. Typically the client pays the entire fee for the attorney’s services upfront because, once the filing is complete, any unsecured debt is eliminated—including lawyers fees—and the attorney would be in danger of not getting paid.
The Law Offices of Eugene Mogilevsky LLC in Indianapolis, Indiana charges $1,000 for filing Chapter 7 bankruptcy for an individual. The price increases if the person has one or more businesses, tax implications or a potential adversary case. The price includes all necessary meetings with the lawyer (not an assistant or paralegal), attendance at court hearings and 341 Meeting of Creditors, and a commitment to complete the bankruptcy on time. On average, this process takes about 8–11 hours of work time.
According to Law Offices of Eugene Mogilevsky LLC, larger firms may charge $1,250–$1,300 per Chapter 7 filing, and solo attorneys charge approximately $700. Some large bankruptcy specialty firms charge less, but clients typically work with a paralegal most of the time when rates are low.
Chapter 13 allows individuals to create a repayment plan with creditors through the courts. Each bankruptcy district sets a price limit on what attorneys can charge for this service. For example, in the Indiana Southern District, the current price limitation is $4,000. Attorneys can collect a partial payment upfront, but they cannot collect the entire payment before the services are rendered. Law Offices of Eugene Mogilevsky LLC breaks down payment as follows:
Fee requested prior to filing bankruptcy: $1,190
Fee charged to clients as part of their repayment plan: $2,810
Some bankruptcy law firms do not charge anything upfront. Typically, larger firms can absorb the cost of lost labor if the bankruptcy filing gets dismissed.
- Attorney time on the case is much greater when filing Chapter 13 than Chapter 7 because the details (number of issues, court hearings, trustee objections, etc.) are more unpredictable.