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How Much Does a Bankruptcy Lawyer Cost?

bankruptcy-lawyerIn times of financial hardship, it can be a rather daunting task to find and hire a lawyer whom you can trust to help dig you out from under what feels like a mountain of debt.

While it might be tempting to try and go it alone, unforeseen hurdles and complications in the bankruptcy filing process often times make the decision to forgo an attorney very regrettable. Not only will a bankruptcy lawyer be able to help you navigate your way through the bankruptcy process, but they will also be there to protect you from costly mistakes along the way.

How much a bankruptcy lawyer costs can range from anywhere from hundreds, to tens of thousands, depending on both the type of bankruptcy under which you are filing and the complexity of the case. Here is some more info to help give you an idea of bankruptcy lawyer cost.

Types of Bankruptcy: Chapter 7, Chapter 11, and Chapter 13

Chapter 7 Bankruptcy

This chapter of bankruptcy, sometimes referred to as “liquidation” bankruptcy, eliminates most or all unsecured debt the individual debtor may owe. While chapter 7 bankruptcy can provide a great deal of relief, it is important to bear in mind that you may be required to relinquish some of your property as a result. Another significant factor when filing for this type of bankruptcy involves what is called a “means test”. Essentially, if your household income is below that of the median household income for a household of your size, in your state, you pass the means test and are on your way to filing. If your income is greater than that of the median income level in your state, you will need to perform a calculation to determine whether or not your disposable income is high enough to allow for you to pay off some of your unsecured debt. If this is the case, you will instead most likely be looking to file chapter 13.

Chapter 11 Bankruptcy

Chapter 11 bankruptcy is most commonly filed by businesses and the debtor is given the opportunity to restructure and reorganize their finances. The way this works is through the formulation of a plan to allow time for the debtor to restructure their debts, in order to begin paying back creditors. This type of bankruptcy will generally cost you more in lawyer fees than chapter 7 or chapter 13, due to the more complex nature of a chapter 11 filing.

Chapter 13 Bankruptcy

Also referred to as a “wage earner’s plan”, chapter 13 provides an individual with the opportunity to reorganize their finances, and pay back creditors within a three to five year time span.  Whereas chapter 7 involves the potential liquidation of personal assets, chapter 13 serves to enable individuals to save their homes from being foreclosed upon. Once a repayment plan is structured, the debtor is responsible for making all newly rescheduled payments on time. Who is eligible to file chapter 13? Corporations and partnerships are restricted from filing, however any individual who’s unsecured debts are less than $360,475 and secured debts less $1,081,400 is considered to be eligible (with a few exceptions).  In the case of filing chapter 13, you will, more often times than not, be paying higher lawyer fees than you would in the case of chapter 7 bankruptcy.

Complexity of the Case

As mentioned above, the cost of hiring a bankruptcy lawyer will largely reflect:

  • The chapter by which you choose to file
  • Preparation of legal documents
  • Whether or not you would like your attorney present at the 341(a) Meeting of the Creditors
  • Time needed to answer any questions/provide legal advice outside of preparing the petition for bankruptcy

When seeking out a bankruptcy lawyer, it is important to keep in mind both the costs of court fees and whether the attorney seeks a flat or hourly rate. Aside from cost alone, you will also want to consider several other factors, such as the ones discussed in How to Hire a Lawyer.

Debt can be a major burden on your life, causing both stress and financial hardship. Consult with a bankruptcy lawyer near you to determine if bankruptcy is a viable option for your debt situation.