COSTS AND FEES FOR FILING BANKRUPTCY**
People filing bankruptcy are understandably concerned with what it will cost them to get relief from their debts.
We’ve all seen the ads out there: “Bankruptcy for $750,” or whatever.
I get asked several times a day how much I charge to file bankruptcy, without being given any information about the potential case.
I wish it was that simple and I could just give a stock answer, but unfortunately, bankruptcy filing is not a “one-size-fits-all” proposition, at least not when the case is handled properly.
Every case is different and can have its own complexities and challenges.
Court Filing Fees
These are fees set and charged by the court and are required to file any bankruptcy in addition to any attorneys fees. These fees do not go to the attorney.
- The court filing fees as of November 21, 2012 are:
- Chapter 7: $306
- Chapter 13: $281
- Chapter 11: $1,213
When selecting an attorney, you need to ask several important questions:
- Am I comfortable with this attorney?
- Does this attorney have the experience and expertise to handle the problems that may arise in my case?
- Is he/she Board Certified Specialist in Bankruptcy Law? -Certification requires additional testing on all facets and nuances of bankruptcy law, independent review of skills, and peer review.
- Is the attorney handling the main portions of my case himself, or delegating the work to secretaries or paralegals?
- What am I getting for my fees? -This last question deserves some attention. I see all kinds of advertisements by attorneys offering bankruptcies at ungodly low attorneys fees with the disclaimer that says “fees starting at…”. I would be most curious to find out if the attorneys actually take any cases at that amount. I sincerely doubt it.
- Does your attorney provide a retainer agreement or services contract outlining specifically what is covered for your fees and outlines the responsibilities of both you and the attorney? -A retainer agreement is required. You should demand it so that there is no question about what you are paying for.
Beware Low Cost, Cheap Bankruptcy Attorneys
To be frank: If an attorney is only charging $750 to handle a case for you, they are most likely merely a glorified “petition preparer” or “bankruptcy mill” and they don’t worry about these things because they won’t be around or able to assist you with them when the problems arise, or they can absorb the cost of the lawsuit later because of the volume of cases they handle.
Thus, they don’t care how well they have presented your case or what things might have been done to prevent problems. They are probably also not a certified specialist in bankruptcy.
In my blog I discussed the risks of using Low Cost Bankruptcy Attorneys to represent people in the highly specialized field of bankruptcy, so won’t repeat that here. As attorneys it is important to strike a balance between the client’s need for competent representation with their financial ability to pay for it. The reality is that under the new bankruptcy laws, even the seemingly simplest bankruptcy case can go horribly wrong without using a knowledgeable attorney. There are so many little requirements and procedures for ALL cases, that there’s just no way to get around it.
What are you getting for your money?
We all like to think that all attorneys and doctors are equally competent, but it is simply not true. There are good doctors and hopelessly bad doctors and the same is true of attorneys. I’m not suggesting that just because an attorney charges lower fees that he is incompetent. I merely point out that the overriding decision on who to select should not be based solely on the fees charged.
There are a lot of bankruptcy attorneys out there…just like there are a lot of doctors. What amazes me is that people would almost never go to a doctor who charges “bargain basement” prices for something serious.
Wouldn’t that make you skeptical?
So, why would you do that with an attorney who is essentially helping your financial future? I don’t know the answer to that, but I get all kinds of calls from people who are trying to discharge (eliminate) $50,000 or more debt and will go elsewhere to save $200 on the attorneys’ fees.
Those same people, and others, often return to me later after filing their bankruptcy with an incompetent attorney or paralegal and then want to hire me to fix the problems, if possible (and often it is not possible at that point).
I Keep My Fees Competitive and as Low as Possible to Retain a High Level of Service
I am not saying that all lower-priced attorneys are incompetent and I’m not saying all high-priced attorneys are great. I’m merely saying that while the cost of hiring an attorney is certainly a relevant and important factor, your chief criteria for selecting an attorney should NOT be the price because there are many far more important factors, as explained below.
My fees are not the lowest, and they are nowhere near the highest. I charge the lowest amount possible to be able to give my clients the level of service that they deserve and which is necessary to accomplish their objectives.
I have structured my practice from my first day of practice to minimize my overhead so I can provide top quality, personalized representation to my clients for far less than a large law firm would charge, but certainly more than bargain basement “newbies” or firms running a “bankruptcy mill” charge.
Based on the testimonials and comments received from my clients over the past 20 years, I think I have been pretty successful with this.
Fees vary depending on a number of factors, including which chapter is being filed, the complexity of the case (which includes potential issues with assets, exemptions, analysis of dischargeability), number of creditors, anticipated problems from creditors, the Trustee or U.S. Trustee’s Office, etc. There is simply no way to give a fee quote without knowing all the relevant facts of your individual case, determining which chapter(s) you are eligible for, etc.
The only way to do this is to have a consultation (which is usually free). Sometimes, if a case is VERY simple, I can give a fee quote over the phone after a brief conversation, but I need to have some information about the facts and situation.
Getting the Money to Pay For Bankruptcy
One admittedly big problem people facing bankruptcy often have, of course, is a lack of cash. However, there are ways to free up cash once you understand how the system works. For example, if your cash flow is low because you are making minimum payments on your credit cards, you may be able to stop (in most cases) making those payments and save up some money for attorneys’ fees (don’t do this without advice of your attorney).
There are also ways, depending on what Chapter you are filing under, to make payments over time or to obtain some money from sale of assets. In any event, there is usually a way to make it work.
How To Hire a Bankruptcy Attorney
The following articles discuss factors other than costs and fees that are important to consider:
**Please note that this has been an exploration of the fees and costs for representing a debtor in a proceeding under the above chapters for the preparation and filing of the paperwork, etc. It does not cover creditor representation or services that go beyond the initial retainer agreement for any client. Such fees are normally charged at an hourly rate to be determined after consultation.