Do You Need A Bankruptcy Lawyer
Filing for bankruptcy is not only complicated, but it can also have serious, long-term financial consequences if you make a mistake. The stakes are even higher in Chapter 7 bankruptcy because you generally cant stop the process once it’s underway. So if youre considering hiring an attorney, youre not alone. In our survey, 95% of our Chapter 7 filers hired a lawyer to represent them.
But of course, not everyone has the money for an attorney. Some folks who are on a limited budget, but aren’t comfortable filling out bankruptcy forms themselves, choose to enlist the help of a bankruptcy preparer. However, keep in mind that a bankruptcy preparer cannot represent you in court or give legal advice, such as which debts or assets to list in your bankruptcy. The U.S. Supreme Court decides the maximum amount a bankruptcy preparer can charge , but the cap may be lower in your district court. Any bankruptcy preparer has an obligation to tell you what the local limit is.
Bankruptcy Court Filing Fee
Anyone filing bankruptcy under Chapter 7 bankruptcy will pay $335 which is charged as a filing fee. These individuals should also expect an additional charge between $15 and $20 as the fee to be paid to the Bankruptcy Trustee.
The bankruptcy court charges a filing fee. It is standard in all Chapter 7 bankruptcy cases, regardless of the size of the case or whether the case is an individual, joint, or business case. The total filing fee for a Chapter 7 bankruptcy case is $335, which includes a $75 administrative fee and a $15 fee for the Chapter 7 Trustee.
Summary of the Chapter 7 filing fee breakdown :
You can apply to have the Chapter 7 bankruptcy filing fee waived. The waiver of the bankruptcy fee is based on your income. Your household income must be less than 150 percent of the official poverty line at the time of filing.
If you do not meet the income requirements to waive the Chapter 7 filing fee, you may request an installment schedule. You must file a form requesting to pay the filing fee in installments. If the bankruptcy court approves the installment request, you may be able to pay the filing fee in four installments. The filing fee must be paid in full before you can receive your bankruptcy discharge.
Presumptively Reasonable Or No
The bankruptcy law gives judges the right to examine the fees charged by attorneys and order them refunded to the trustee if they are unreasonable. To avoid being flooded with cases requiring a review of fees, some courts have enacted local rules or guidelines setting “presumptively reasonable” or “no-look” fee amounts. These are more common in Chapter 13 cases, but some courts have set amounts that apply to Chapter 7 cases. Different courts use different terms, but the effect is the same. If attorneys charge an amount equal to or less than the presumptively reasonable or no-look fee, the court usually won’t initiate a review.
- Review isn’t precluded. The court is free to review even a presumptively reasonable fee.
- Not intended as a fee limit. In most instances, these presumptively reasonable or no-look fee amounts are not fee limits. Attorneys can charge a higher fee but will have to follow the procedure set for their particular court to have the fees reviewed and allowed. The attorney will provide information justifying the higher fee for that specific case.
Check with the local rules of your court to find out more, or contact the court clerk.
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Why Would Lawyers Charge An Hourly Fee
Most bankruptcy lawyers will charge on an hourly fee basis. This will provide clients facing substantial financial burdens with a level of certainty of the cost of the process. However in some circumstances bankruptcy lawyers still work off a traditional hourly rate.
Hourly rates are subject to change, depending on the locale and relative experience of the lawyer. You should expect to pay anywhere around $100-$400 an hour for a lawyers time depending on the factors already listed above. To conclude, lawyers that charge a flat rate for the initial filing of the case may then charge an hourly rate if the client asks for help with further proceedings, such as modifying a repayment plan.
Amount Of Attorney Fees
Flat fees for filing bankruptcy can vary greatly depending on the complexity of your case. For example, owning property, having a lot of unsecured debt, recently acquired credit card debt, or having a high income can increase attorney fees in a Chapter 7 case.
Payment Plans
Most filers don’t have to come up with the bankruptcy fees all at once. Just as the bankruptcy court sometimes allows installment payments for the filing fee, most bankruptcy attorneys allow installment payments for the attorney fees.
Know that bankruptcy attorney fees for Chapter 7 cases typically have to be paid in full before the attorney files the case. This is because of the automatic stay, which stops your creditors from attempting to collect on a debt you owe them.
If you owe your bankruptcy attorney money at the time of filing, they become one of your creditors banned by the automatic stay from trying to collect the balance from you. Then, so long as you receive a bankruptcy discharge of your debts, your attorney would never legally be allowed to bill you or otherwise try to collect payment.
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Filing Fee Credit Counseling Credit Reports
These are non-lawyer fees that add to the total cost of a Chapter 7 Bankruptcy. The filing fee is currently $338. If you meet the income requirements, you may be able to waive the filing fee.
The cost of the pre-filing credit counseling course varies but expect to spend between $15 $50 to get your counseling completed. You will also need to do a post-filing credit counseling course after your case is filed. Expect to pay about the same price.
A 3-bureau credit report can be requested for free HERE but you only get to pull it once per year. will allow you to access TransUnion and Equifax but the free option at the time of this writing does not include account numbers. You can also purchase a credit report from Experian.
Chapter 13 Trustee Fee
In addition to the bankruptcy attorney fees, you may also be responsible for the Chapter 13 trustee fee that is paid within the Chapter 13 bankruptcy plan.
This can make Chapter 13 quite a bit more expensive, but it is included in the plan, so it may make it more affordable.
Please see the administrative expense breakdown here and here .
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Your Total Bankruptcy Cost
Adding up all of our costs, youre looking at $350-$450 if you file pro se. Of course, its overwhelmingly likely that your case will be dismissed and youll be left on your own to face your creditors. With an attorney, an average Chapter 7 case can cost anywhere from $1,500 to $3,000. An average Chapter 13 case will run you from $3,000 to $4,000.
Consider that the average indebted household carries over $15,000 in alone, not to mention medical debt, personal loans, second mortgages on underwater homes, and other types of unsecured debt. In bankruptcy, youd pay pennies on the dollar toward that debt.
With that in mind, a few thousand dollars seems like a small price to pay.
Every Bankruptcy Case Is Different
Attorneys will generally base your fees upon the degree of complexity and amount of time anticipated in your Chapter 7.
A case with many creditors will take more time and have higher attorney fees than a case with only one or two creditors.
Our bankruptcy attorneys are dedicated to keeping your attorney fees as low as possible in your Chapter 7 Bankruptcy case. If you call us for a free consultation, we can give you an exact price that is based upon the unique facts of your Chapter 7 Bankruptcy.
Judges Can Examine Attorney Fees in a Bankruptcy
The bankruptcy laws give the Judge in a Chapter 7 case the right to examine the fees charged by the attorney. The Judge can also order a refund of the fees to the trustee if they are deemed to be unreasonable.
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Check Out Unusually Low Advertised Fees
If you see advertisements that promise unusually low attorneys’ fees for your area, be on alert. The advertisements might be deceptive. The attorney might use an a la carte system to increase the quoted fee depending on the services you need. For example, the attorney might charge you more because you have more than a threshold number of creditors, your debt is over some predetermined limit, or you are filing jointly with your spouse.
Many attorneys live up to their advertised promises, however. As with anything, do your homework. Ultimately, you’ll want to select the attorney you’re most comfortable with whose fee is within your price range.
Filing For Bankruptcy Can Cost Anywhere From A Few Hundred To A Few Thousand Dollars Depending On The Type Of Bankruptcy Filed And Whether You Hire An Attorney Or Take A Diy Approach
Filing fees and other miscellaneous costs required to file a bankruptcy petition typically range from $300 to $400. If youre filing on your own, you may not have to pay much more than that.
Working with a bankruptcy lawyer can add to those figures significantly. Their fees can vary widely based on the type of bankruptcy you file for, the market rate where your attorney practices and the complexity of your financial situation.
Coming up with any extra money might seem impossible if youre already struggling to pay for basic expenses and creditors are breathing down your neck. Luckily, assistance may be available if you believe bankruptcy is the right choice for you.
Lets look at the two common types of bankruptcy, the fees you may be responsible for and a few ways you might be able to pay for them.
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Flat Fees Vs Hourly Fees
Most attorneys handle Chapter 7 bankruptcy cases on a flat fee. This means that they charge a set amount up-front for the legal services involved in preparing and filing a Chapter 7 case. An attorney-client agreement should list what legal services the flat fee covers and explain what to expect if something happens that isnât covered by the flat fee.
The benefit to the flat fee option is that barring unforeseen situations you’ll know from the start exactly how much your bankruptcy attorney fees will cost. The alternative to charging a flat fee is charging an hourly fee. The hourly rate should also be included in a written agreement between the attorney and client. It’s possible, but rare, for a bankruptcy law firm to bill hourly attorney fees for filing a Chapter 7 consumer bankruptcy.
How To Check Eligibility For The Chapter 7 Filing Fee Waiver
If you dont want to file by yourself but you still need to save money, you could qualify for a filing fee waiver from the Kentucky bankruptcy court. In order to check your waiver eligibility, you must file Form 103B, also known as the Application to Have the Chapter 7 Filing Fee Waived. Then a local legal aid society could assist you for free.
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Chapter 13 Bankruptcy Filing Fee: $313
To file for Chapter 13 bankruptcy, you will need a $310 filing fee. In many instances, it is possible to avoid paying all filing fees up-front and instead make payments directly to the Court monthly. The $310 Chapter 13 Bankruptcy filing fee is broken down as follows:
Chapter 13 Total Filing Fees: $313
$310 Initial filing fee
It costs $235 to reopen a Chapter 13 Bankruptcy filing in Michigan.
Fees Charged By The Court To File Bankruptcy
Currently, a chapter 7 bankruptcy petition costs $306 at the time of filing. The court will increase those fees every so often so keep an eye on their website . What can you do if you need to file for bankruptcy before you have the money? You can either ask the court to pay the $306 in installments or apply for a fee waiver completely . The court will usually allow you to get the protection bankruptcy offers and make payments over the next few months. Getting the fee completely waived is more difficult because you have to be unable to make the filing fee payments and your income must be below 150% of the current poverty level. The picture below shows what 150% looks like for families of different sizes.
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How Much Does It Cost To File A Chapter 13 Bankruptcy In Michigan
Chapter 13 cases can be more costly than Chapter 7 because of the additional work involved. Some attorneys will only charge you for your filing fee, while others might want something extra up front. Youll pay off these costs through the repayment plan so that it wont break your bank in one fell swoop!
The attorney who handles your Chapter 13 bankruptcy Michigan case will help you navigate the complex rules governing payment plans to create one that suits you and satisfies court requirements. If creditors attempt to challenge anything, shell be there for support so they cant take advantage of any loopholes in the law!
The Trustee will work with you to create a payment plan for your debts. The plan lasts 3-5 years, and in the end, all remaining unsecured debt is discharged. Unlike under Chapter 7, bankruptcy law usually sets reasonable attorney fees in these cases if they charge the presumptively reasonable fee .
Chapter 13 bankruptcy requires more work for attorneys and merits the higher fees that they will charge. Individuals considering Chapter 13 should be aware of what services an attorney provides before deciding on a flat fee or hourly. As these rates can vary depending upon many factors, including added unexpected events or if any information is withheld during meetings with your counsel.
Cost Of Chapter 7 Bankruptcy
If youre thinking about hiring a lawyer to file chapter 7 bankruptcy charges can vary much more than filing Chapter 13 bankruptcy. The differences in fees may depend upon the complexity and specific details of your case. Some larger firms may charge more to cover advertising, overhead, and experience level. In general, attorney fees for a Chapter 7 bankruptcy will range from $900 to $2,500. It is during your free consultation that more accurate costs can be determined.
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Which Bankruptcy Chapter Can You File
Most attorneys will begin the evaluation by qualifying you for the most common type of bankruptcy, a Chapter 7 case. If you don’t meet the income standards, if you need to save a house or car, or it won’t take care of your debt problem, you’ll need to file a Chapter 13 bankruptcy and make monthly payments into a three- to five-year plan.
You can expect the bankruptcy lawyer to ask the following preliminary questions :
- your marital status
- the number of dependent children living in your home
- your income
- where you work
- where you’ve lived for the past two years
- whether you’ve filed taxes for the previous four years , and
- whether you’ve filed bankruptcy in the past eight years.
Chapter 7 Case Difficulty
Most clients believe they have an easy case. In fact, they’ll often start the bankruptcy conversation saying that very thing.
But even though you know which problem you’d like to file bankruptcy foryou can’t pay bills each month, or you need to stop collection actions or litigationthat particular problem isn’t what will determine the complexity of your case.
What increases complexity are procedural things you probably aren’t aware ofthe bankruptcy documentation needed for your business or side hustle, property value justifications, potential creditor objections, , and so on. Bankruptcy lawyers assess these types of irregularities and determine whether the problem can be solved. If so, the lawyer will factor in additional preparation and Chapter 7 trustee interaction time.
These two examples will give you an idea about how cases can differ:
- Simple case. You have one job, five credit card debts, and no assets other than a car and basic household belongings. Your big question? You want to know how much debt you need to file for bankruptcy.
- Complicated case. You have a spouse who lives in a separate residence, four kids, three jobs, gambling winnings, and a mortgage payment you’re behind on. You also have tax debt, a timeshare in the Bahamas, a rare backyard fern that’s valuable yet toxic, recently-closed bank accounts, and a non-profit business. Your question? You’re wondering if you should stop using credit cards now that you’re considering bankruptcy.
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Chapter 13 Attorneys Fees Need Not Be Paid All At Once
The most common way of paying a lawyers flat fee in Chapter 13 bankruptcy is to make an initial down payment before the bankruptcy petition is filed, with the remainder of the fee included in your monthly payments under your repayment plan.
Example: Brian consults with an attorney and learns that he can solve his financial problems in Chapter 13 bankruptcy by making a $500 payment every month for five years. He agrees to pay the lawyer a total fee of $2,500 and puts down an initial deposit of $1,000. During the case, the bankruptcy trusteethe person in charge of overseeing the casewill pay Brians attorney a certain amount , with the remaining $400 going to Brians creditors. After the $1,500 balance for the lawyers fee is paid off , the trustee will pay the full $500 each month to the creditors.
In some cases, however, the attorney might ask you to pay the full fee upfront.
Because flat-rate attorneys fees are the norm in Chapter 13 bankruptcy, its not surprising that only 4% of our survey respondents agreed to pay their lawyers an hourly rate. If your case involves a business or if you have a high income and will be required to pay a large amount under your repayment plan for unsecured debts , your lawyer might want to charge by the hour.