The nationwide average cost for a bankruptcy attorney is between $1000 and $1050. Several factors affect the total cost of hiring a bankruptcy attorney, including the complexity of the case, the type of bankruptcy, filing fees, and more.
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.
What's in this cost guide?
- What does a bankruptcy lawyer do?
- Cost of Filing a Chapter 7 Bankruptcy
- Cost of Filing a Chapter 13 Bankruptcy
- Bankruptcy Attorney Fees
- How to Hire a Bankruptcy Attorney
What does a bankruptcy lawyer do?
A bankruptcy attorney assists individuals and businesses find debt relief through a system of federal laws. Filing for bankruptcy is an extreme measure, and hiring an attorney as a guide through the process can add to existing additional financial troubles. However, filing bankruptcy as an individual without a lawyer can be incredibly risky. Simply leaving an asset off a document can put your case at risk of dismissal, and hurt your chances for debt consolidation or discharge.
Filing a Chapter 7 Bankruptcy
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 (including non-residence real estate such as a vacation home) 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. Chapter 7 is usually a better choice for those with little income and assets.
The Law Offices of Eugene Mogilevsky LLC in Indianapolis, Indiana charges $1,000 for Chapter 7 bankruptcy fees 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.
Cost of Filing a Chapter 13 Bankruptcy
Chapter 13 bankruptcy allows individuals to create a repayment plan with creditors through the courts, and is often a better option for those with more income and assets. 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.
Bankruptcy Attorney Fees
Most attorneys charge a flat fee when dealing with bankruptcy cases. This covers hours spent on the case, time in court, and court filing fees. Some may charge an hourly fee for legal aid, but since most bankruptcy cases are cut and dry, this fee structure is rare.
How to Hire a Bankruptcy Attorney
Filing for bankruptcy is an expensive and draining process. Evaluate other options before deciding to declare bankruptcy, and ask potential attorneys for their advice during the screening process. Narrow your options down to attorneys with a track record of debt relief success in filing both Chapter 7 and Chapter 13 bankruptcy for clients. You'll get a better idea of the personality and background of the attorney during the initial consultation.
Before meeting with potential attorneys, collect and organize documents detailing your financial situation including tax returns, credit score, copies of your mortgage and vehicle loan statements, paycheck stubs, and more. The more information you can provide up front, the more the attorney can tell you about potential outcomes of your case.