How Much Does a Bankruptcy Lawyer Cost?

When you find yourself in an overwhelming financial situation, bankruptcy is a way out. Once you’re considering bankruptcy though, you don’t want to make your situation worse, and so the cost of associated legal fees becomes important.

Bankruptcy lawyer retainer fees can start between $1,000 and $6,000 depending on the specifics of your case. This can quickly become an additional burden under already uneasy conditions. Fortunately, there are options that allow you to bring down the cost of your legal fees.

An unbundled attorney can provide full or limited representation starting from $500 to $1,500, allowing you to save money by managing parts of the case you can handle on your own while bringing in a lawyer for specialized advice or important tasks.

What Does a Bankruptcy Lawyer Do?

Filing for bankruptcy, as unfortunate as it sounds, can be an efficient solution for getting out of a very difficult financial situation and overcoming the burden of heavy debt. It can help your creditors get some or all of their money back and give you the option to propose a debt repayment plan that won’t ruin you financially.

If you are filing for personal bankruptcy, you are not legally required to have legal representation. However, if you do find the legal proceedings daunting, a bankruptcy lawyer can take away a lot of your headaches. 

A bankruptcy lawyer provides you with legal advice, handles related paperwork, and oversees the whole process from start to finish. Both debtors and creditors can use bankruptcy lawyers. Here are some of the most common services performed by a bankruptcy lawyer:

• Navigating the legal process: Bankruptcy proceedings can be quite complex—and each situation requires a customized approach. A lawyer can help you decide which bankruptcy chapter best fits your case. They can also advise you on the specifics of bankruptcy filing in your district, and help you understand what assets you can hold on to during bankruptcy.
• Preparing paperwork: Bankruptcy filings require quite a lot of documentation. Lawyers specializing in such proceedings generally have specialized software that helps them efficiently fill in and sort through all the needed forms. Be prepared to supply your lawyer with all the needed financial information: income, expenses, assets, debt, and more.
• Representing you at hearings: Once a debtor has filed for bankruptcy, they will need to attend a court hearing known as the 341 Meeting of Creditors. A bankruptcy lawyer can accompany and represent you at this and other related hearings.
• Discharging debt and recovery: Your bankruptcy lawyer can also help you with the follow-up of your bankruptcy proceedings. They will guide you through the discharge process (the release from debt liability) and recovery (identifying the causes of your bankruptcy and offer guidance on how to avoid the same situation in the future).
• Negotiating with creditors: A lawyer can provide assistance with restructuring mortgages, car loans, and other debts, with prior knowledge of how much large institutions are able to compromise.

While personal bankruptcy cases don’t require you have legal representation, this may not be the most effective way to go about handling your case. Hiring a bankruptcy lawyer can help you save time and make the procedure less stressful.

If you prefer to represent yourself in your bankruptcy filing, be prepared to do substantial research. Bankruptcy filings can get complicated, and you may have strict paperwork deadlines to meet. If possible, get a free consultation.

Understanding Bankruptcy

Bankruptcy involves a set of legal procedures initiated by a person or business when they are unable to pay their debts. 

To file for bankruptcy, the debtor will need to file a petition. In some cases, the petition can also be filed on behalf of creditors.

The assets of the person or company in debt will then be evaluated, and a part of them may go towards repaying the outstanding debts.

Bankruptcy grants both individuals and businesses in debt and their creditors a way out of a very complicated financial situation. Debtors are granted a chance to have their debts forgiven and start fresh, and creditors get access to some form of repayment via liquidated assets of the debtors.

There are several types of bankruptcy filings, including Chapter 7, Chapter 9, Chapter 11, Chapter 12, and Chapter 13.

Saving Money During Bankruptcy

Most bankruptcy lawyers charge a flat fee for a bankruptcy filing case. The exact amount depends on a number of factors: the complexity of your case, the chapter you are filing under, the number of court hearings, and more.

For instance, lawyer fees for bankruptcy filings under Chapter 7 may range from $1,000 to $3,500, based on the specifics of the case. On the other hand, filing under Chapter 13 will generally be more expensive — up to $6,000.

In some cases, hourly rates are also an option, but these are quite rare when it comes to consumer bankruptcy proceedings. And be ready for your lawyer to charge an additional hourly fee for any extra work not included in the flat rate package.

While larger law firms may have higher marketing costs—and thus higher prices for legal services compared to solo practitioners—they may also offer lower fees because of the larger volume of cases.

New lawyers typically charge less compared to more experienced lawyers. If your case is simple and you only need help with paperwork and a standard court hearing, hiring a less experienced lawyer may be a good way to cut costs.

Most lawyers charge a flat rate for a package of services related to bankruptcy filing. Because this is a comprehensive set of services that includes evaluating your case, preparing related paperwork, attending court hearings, managing follow-up proceedings, and more, the costs for these packages can be quite high. If you need a bankruptcy lawyer to oversee your entire case, these costs may be unavoidable.

On the other hand, if your case is relatively simple, and you only need a lawyer’s help in some stages of the process (for instance, filing paperwork or attending a court hearing), you may benefit from using unbundled legal services. Also known as limited representation, this approach is based on providing the client only the legal services they need for a fixed price. Using unbundled legal services can help you cut costs significantly, bringing your overall expenses to as low as $500 to $1,500. These lawyers also tend to offer full representation at lower prices when needed.