Like most lawyers, bankruptcy attorneys base their fees on how much work they're going to have to do in order to fix your particular problem. The less they'll need to do for you, the less you'll pay. Where you live also plays a part in how much hiring an attorney will cost you. Lawyers in major metropolitan areas typically charge more than those in rural or economically depressed areas. Even so, some basic principles apply.
A reputable bankruptcy attorney probably won't tell you right off the cuff how much your case is going to cost because he doesn't know – at least not until he understands the individual issues your case involves. Until he gets a firm handle on your situation, he may not even be sure if you can file for Chapter 7 or if you must file for Chapter 13 instead because you earn enough money to pay your creditors at least something. Self-employed debtors may have more complicated issues than those who work for employers, and secured debts are typically more complex than problems associated with unsecured debt. Most bankruptcy lawyers will meet with you first to determine the specifics of your particular problem, but some won't charge you for this initial consultation.
In a Chapter 7 bankruptcy, you must first pass a means test to prove that you don't have ample income left to pay your debts after you meet your necessary monthly expenses. If you pass the test, your attorney will file a petition on your behalf, listing all your debts and assets and making use of certain exemptions which allow you to keep some of your property. The bankruptcy trustee then sells the remainder of your assets and gives the money to your creditors. If they don't receive full payment, the balance of your debts is discharged or erased. The entire Chapter 7 process usually lasts about three months, and most Chapter 7 attorneys want payment in advance. If they let you wait a few months until your bankruptcy is discharged, you no longer have any incentive to pay them. However, some will work out payment plans. They'll do the preparatory work in installments as you make payments, inching your case along. Typically, you must pay in full before they'll file your bankruptcy petition with the court, however.
A Chapter 13 bankruptcy involves presenting a payment plan to the court in which you propose to pay off your debts over a three- to five-year period. In exchange, your creditors can no longer harass you for payment or – in most cases – charge you interest or penalties. Your monthly payments under a Chapter 13 plan are typically far less than you'd pay if you continued giving all your creditors full monthly payments without bankruptcy protection. By its very nature, you'll be involved in this legal action for quite some time, and a lot can go wrong in three to five years. Your original payment plan might become unworkable so adjustments must be made. As a result, Chapter 13 fees are typically more than Chapter 7 costs. You usually don't have to pay up front, however. Chapter 13 attorneys can roll their fees into your payment plan. At a minimum, they'll usually include a portion of their fees in your plan.
Expect to pay anywhere from at least $1,000 to $2,500 for a Chapter 7 bankruptcy. Your fees may land on the lower end of the scale if your attorney has a paralegal working under him, because paralegals can do much of the work on most Chapter 7 cases. If your lawyer works on his own or is very hands-on, your fees will be more. Attorney costs for Chapter 13 proceedings typically begin at about $3,000.
- DeMott Law Firm: Bankruptcy Lawyer's Fees – "How Much Is It?"
- Showell Blades Bankruptcy Law: How Much Do You Charge to File Bankruptcy?
- The Law Firm of Robert S. Brandt: How Much Does Bankruptcy Cost?
- Orlando Bankruptcy Law Blog: Reasonable Attorneys Fees for Chapter 7 Is Subject of Bankruptcy Court Order
- United States Courts: Chapter 7 – Liquidation Under the Bankruptcy Code
- United States Courts: Chapter 13 – Individual Debt Adjustment
Beverly Bird has been writing professionally for over 30 years. She is also a paralegal, specializing in areas of personal finance, bankruptcy and estate law. She writes as the tax expert for The Balance.