Average Attorney Fees in Chapter 7 Bankruptcy

You're not alone if you're wondering how much lawyers charge for Chapter 7 bankruptcy. You can expect to pay about $2,400 or more to file for bankruptcy ($2,000 for attorneys' fees, and $400 for the bankruptcy filing fee and credit counseling expenses), and most filers find it well worth the cost. Ultimately, the price will depend on the complexity of your case, the current rates in your area, the bankruptcy lawyer's availability, and their level of experience.

Once you find a practitioner within your price range, you'll want to ensure that you receive the needed services. The tips below will assist you during the interview process.

Introduction to Chapter 7 Bankruptcy Costs

Chapter 7 bankruptcy offers individuals a fresh financial start by discharging certain qualified debts. This chapter typically takes approximately four months to complete and doesn't require creditor repayment, making it the chapter most filers prefer when their income is low enough to meet the qualification requirements.

Understanding Bankruptcy Attorney Fees

Hiring a qualified bankruptcy attorney can have an impact on the success of your filing. However, it isn't unusual to wonder who pays for legal services and whether it's possible to file for bankruptcy for free. But these services come at a price. Being aware of potential costs helps filers plan financially even before meeting with counsel.

How Much Do Lawyers Charge for Chapter 7 Bankruptcy Fees?

You can expect to pay between $1,500 and $2,500 for bankruptcy attorneys' fees. You might even find a lawyer willing to represent you for as little as $1,000. However, this price would be an exception, and your case would likely need to be very simple.

Flat Fee or Hourly Fees?

Most lawyers will charge a flat fee that covers the basic services you'll need, such as preparing and filing the documents, appearing at the meeting of creditors, and negotiating a reaffirmation agreement with your car lender. Most lawyers don't charge on an hourly basis because it's relatively simple to predict how much work will be involved. Additionally, flat fees are disclosed and approved at the time of filing, eliminating the need for later court approval.

Are the Costs to File Bankruptcy Different Depending on Location?

The fees charged by professionals vary significantly. Consequently, the average cost of Chapter 7 bankruptcy lawyer fees in your area might not reflect prices elsewhere. For example, you can expect to pay more if you live in regions with high business expenses, such as major cities in California or New York, while you will likely pay less in areas where the cost of living is comparatively lower.

In contrast, you will likely pay less in areas where the cost of living is comparatively lower. But not always. For instance, if you live in a rural area with fewer professionals, the fees might be slightly higher. Compare prices and shop around as you would when hiring any service.

Do Higher Chapter 7 Bankruptcy Costs Mean a Lawyer Is Good?

Not necessarily. The amount you're charged won't indicate whether someone is qualified to represent you. A more accurate determinant would be the percentage of the firm's practice that involves bankruptcy and the number of cases filed. Don't hesitate to ask.

Do Bankruptcy Litigation Lawyers Charge More?

Anytime you deal with litigation or an "adversary proceeding" (bankruptcy trial), you can expect to pay more. Many bankruptcy lawyers will file your petition, but won't handle an adversary proceeding should your case take a wrong turn. If you suspect someone might sue you after you file for Chapter 7 bankruptcy, consider hiring a lawyer with bankruptcy litigation experience—even if it costs more.

Learn how to avoid getting sued by a creditor for credit card fraud and why you should avoid running up credit card balances before bankruptcy.

Additional Costs in Bankruptcy Filings

When calculating how much it will cost to file, you'll find that the Chapter 7 bankruptcy lawyer price will be the most substantial. However, be prepared to incur a few additional costs.

Bankruptcy Filing Fees

In addition to the costs you'll pay for legal representation, you'll pay a court filing fee when you submit your paperwork to start the case. The Chapter 7 filing fee is $338, and the Chapter 13 filing fee is $313 (amounts are subject to periodic increases).

In Chapter 7, you can apply for a fee waiver if your income is low enough. If it's too high for a waiver, you can ask to pay it in four installments.

Credit and Debt Counseling Courses

Before filing, most filers must complete a credit counseling course and submit the certificate with their petition. A second debt counseling course must be taken after filing. The courses generally cost between $35 and $50, but could be lower because providers need to consider the debtor's ability to pay.

How Can I Find a Good Chapter 7 Lawyer?

Ask around. Your best option is usually to hire a bankruptcy lawyer referred by someone you know. A trusted source, such as your accountant or another lawyer, can provide you with valuable insights into a bankruptcy lawyer's qualifications.

Ultimately, you'll want someone who has practiced bankruptcy law for a significant period. This criterion is likely more important than most other factors, including the lawyer's likeability.

Should I Meet With a Private Attorney Before Hiring Them?

Yes, you can meet either in person or virtually. Even if a lawyer seems perfect over the phone, it's important to meet face-to-face with the attorney providing the legal advice. A skilled paralegal can handle much of the work in a Chapter 7 bankruptcy. However, the paralegal shouldn't offer legal advice.

If you're concerned about expenses, inquire whether the lawyer provides a free initial consultation or charges a nominal fee that can be deducted from the total cost if you decide to hire them.

How Will I Know If a Chapter 7 Bankruptcy Lawyer Is Worth the Cost?

The following questions should be helpful when evaluating whether a lawyer can deliver necessary services.

If I file for bankruptcy, which chapter should I choose? Most attorneys will start by qualifying you for a Chapter 7 case. If you don't meet the Chapter 7 means test requirements or need to save a house or car, the lawyer will explain the benefits of Chapter 13 bankruptcy.

How quickly can I file for bankruptcy? When time is of the essence, you'll want to confirm whether the bankruptcy lawyer can file your case immediately using the emergency bankruptcy filing procedure. Be sure to discuss lawsuits, foreclosure, wage garnishments, evictions, and other time-sensitive matters.

Will my property be at risk? Although most people can retain all their assets in bankruptcy, this isn't always true. Your lawyer should explain whether you can protect or "exempt" your property in bankruptcy.

If I file for bankruptcy, will it erase my debt? Some debt types, or "nondischargeable debts," aren't erased in bankruptcy. Ask the lawyer to explain whether you can eliminate or "discharge" all of the debts in your case. You might not want to proceed with the case if you find that you'll be left repaying your back child support or recent tax debt.

What do your advertised Chapter 7 fees cover? Be alert if legal advertisements promise unusually low attorneys' fees for your area. In such cases, you must verify that the fee covers all necessary expenses before hiring them. Fortunately, most professionals live up to their advertised promises, but as with anything, do your homework. Ultimately, you'll want to select someone with whom you're most comfortable and whose fee is within your price range.

The Cost of Chapter 13 Bankruptcy

Although most people choose to file for Chapter 7 when they qualify, in some instances, it might not offer the necessary benefits. A common situation that might necessitate another chapter is when foreclosure is involved and the debtor wishes to retain their home. Unlike Chapter 13, Chapter 7 doesn't provide a mechanism that allows a filer to catch up on late payments over time.

If you find that Chapter 13 is the best option for you, you'll notice that Chapter 7 and Chapter 13 bankruptcy filing fees and the amount you must pay upfront differ significantly. You can expect the average Chapter 13 bankruptcy attorney fees to be considerably higher. However, you might be pleasantly surprised to learn that you'll likely be able to pay a good portion of your legal fees through the Chapter 13 plan over time. If you file for Chapter 7, the lawyer will expect full payment before filing your case.

Need More Bankruptcy Help?

Did you know Nolo has made the law accessible for over fifty years? It's true, and we wholeheartedly encourage research and learning. You can find many more helpful bankruptcy articles on Nolo's bankruptcy homepage. Information needed to complete the official downloadable bankruptcy forms can be found on the Department of Justice U.S. Trustee Program website.

However, online articles and resources can't address all bankruptcy issues and aren't written with the facts of your particular case in mind. The best way to protect your assets in bankruptcy is by hiring a local bankruptcy lawyer.