I am a firm believer in do-it-yourself law, but I also think that the learning curve for some tasks is just too steep for many people to handle—especially given the other problems in their lives. If you realistically think you can keep your house, hire a lawyer if you can possibly afford it. If you are only trying to delay the inevitable, hire a lawyer if you can, but also consider handling the case (or most of it) by yourself.
I think you almost certainly will need a lawyer if you are determined to keep your house by:
- fighting a foreclosure in court, or
- filing for Chapter 13 bankruptcy and making up missed payments over several years.
You will probably benefit from having a lawyer if you realize that you’ll probably lose the house sooner or later, but you want to delay the foreclosure and stay in your house as long as possible by:
- fighting a foreclosure in court, or
- filing for Chapter 13 bankruptcy (to delay foreclosure).
When can you go it alone? Having a competent lawyer to represent you can always be to your benefit, but the amount you’ll have to pay for one can often outweigh the benefits. With that in mind, you might sensibly choose to represent yourself if:
- you are filing for Chapter 7 bankruptcy to delay your bankruptcy by a few months, or
- you are filing for Chapter 7 bankruptcy to get rid of your other debts so your mortgage will be more affordable or so that you’ll emerge from your foreclosure with a fresh start.
What Type of Lawyer Do You Need?
Most lawyers who represent people in foreclosure actions specialize in real estate transactions, consumer protection, or bankruptcy. As the number of foreclosures grows, so does the number of lawyers who have expertise in all three areas.
How do you know what expertise a lawyer has? Your best shot is to pop the question directly. Ask “Do you have the experience necessary to help me with my foreclosure?” or “How many foreclosure cases have you handled, and what were the results?” This approach may seem naïve, but my sense is that most lawyers appreciate this approach and will give you honest answers.
As a general rule, if you want to keep your house but you have concluded that you don’t want to file for bankruptcy, a real estate lawyer may be the best choice. A real estate lawyer will be comfortable analyzing the lender’s paperwork and negotiating with the lender to keep you in your house. On the other hand, if it looks like you won’t be able to work something out with the lender, a bankruptcy lawyer is likely your best choice. Bankruptcy is a highly technical area, and few non-bankruptcy lawyers know the tricks of the trade.
How to Find the Right Lawyer
If you are looking for a lawyer, it’s worth it to shop around. Here are some tips.
Start with personal referrals. This is your best approach. If you know someone who was pleased with the services of a real estate or bankruptcy lawyer, call that lawyer first.
See whether you can get free or low-cost help. Many law schools sponsor clinics that provide free legal advice to consumers. And many places have Senior Law Projects, with lawyers who will, without charge, help people over 55 with debt and foreclosure issues. To find something near you, Google “senior legal services” in your area. Many parts of the country also have functioning legal aid offices that will help people who qualify—who are poor enough—deal with foreclosures. And if you don’t qualify, you may get a quality referral to a lawyer who won’t charge you as much as others in the community might.
Be careful with lawyer referral panels. Most county bar associations will give you the names of lawyers who have expertise in fighting foreclosures. But some bar associations may not do much screening of the lawyers they list. Ask about this when you call.
Check out online directories. Both bar associations and commercial websites provide lists of real estate lawyers online, usually with a lot more information about the lawyer than you’re likely to get in a yellow pages ad. Start with Nolo's foreclosure lawyer directory. It sets the standard for providing information about how the lawyer goes about the practice of law.
Look for a bankruptcy expert. To find a good bankruptcy lawyer, consider using the membership directory of the National Association of Consumer Bankruptcy Attorneys, at http://www.nacba.org/. Membership in this organization is a good sign that the bankruptcy lawyer is tuned in to the nuances of bankruptcy, both generally and how it can be used to save your house or keep you in it longer. Also, because foreclosure and bankruptcy are so closely related these days, a bankruptcy lawyer will also likely be knowledgeable about foreclosures.
Choosing a Lawyer
No matter how you find a lawyer, these suggestions will help you make sure you have the best possible working relationship.
Keep in mind that you’re hiring the lawyer to perform a service for you. So fight any urge you have to surrender to or be intimidated by the lawyer. You should be the one who decides what you feel comfortable doing about your legal and financial affairs.
Second, make sure you have good chemistry with any lawyer you hire. When making an appointment, ask to talk directly to the lawyer. If you don’t get through, this may give you a hint as to how accessible the lawyer is.
If you are able to talk to the lawyer, ask some specific questions. Do you get clear, concise answers? Is the lawyer making an effort to teach you about your overall situation? If not, look for someone else. Also, pay attention to how the lawyer responds to your knowledge. If you’ve read this book, you’re already better informed than the average client. Does the lawyer appreciate your efforts to educate yourself?
Your main goal at the initial conference is to find out what the lawyer recommends in your case and how much it will cost. Go home and think about the lawyer’s suggestions. If they don’t make sense or you have other reservations, call someone else.
When shopping for a lawyer, it’s common to hire the first one you talk to, unless the lawyer’s fees are way out of your league or you really don’t get along with the lawyer. You would be best served by visiting a few people before making your final decision. But how do you bring yourself to say, “Thanks for the information. I’ll think about it and give you a call”? I suggest you repeat this to yourself 100 times before you make your first contact. After you walk away the first time, the rest will come naturally.
How Much Will a Lawyer Charge?
With a few happy exceptions, plenty! It’s not a stretch to generalize that if you need an attorney to help you with your foreclosure, you will have difficulty raising the money to pay for it.
Chapter 13 Bankruptcies
Chapter 13 attorneys commonly charge $3,000 to $4,000 a case, depending on the attorney and where you live. If your case appears unusually complex from the beginning, the fee you are quoted may run even higher. If the fees are below a certain amount set by each court (called no-look fees), the court won’t examine them; above that amount and the attorney will have to convince the court that they are justified.
If you can come up with a portion of these fees up front, the rest of the fee can be paid over time through your Chapter 13 plan. How large a portion up front? In routine cases, roughly $1,500 and up.
Chapter 7 Bankruptcies
Attorney fees for a routine Chapter 7 bankruptcy case run from $1,200 to $2,000, depending on the lawyer and the locality. Most attorneys require you to pay the full fee before you file the bankruptcy, because bankruptcy legally discharges (cancels) whatever fees are unpaid as of the filing date.
Lawyers can get permission from the court to charge you for work done after you file, but they would rather not be your creditor after they have worked to get you out of debt. So their up-front charges take into account the work they might have to do after you file.
|Filing for Chapter 7 Bankruptcy: How Much Will It Cost?|
|Filing fee (unless a waiver is granted)||$306|
|Mandatory credit counseling (before filing) and budget counseling (after)||$100|
|If you fill out and file your own bankruptcy papers with the help of How to File for Chapter 7 Bankruptcy (Nolo)||about $40|
|If you hire a nonlawyer bankruptcy petition preparer to do the paperwork||about $150|
|If you hire a lawyer to represent you||about $1,500 to $2,000|
|Total||$450 to $2,400|
Fighting a Foreclosure in Court
If you want to fight a foreclosure in a judicial foreclosure proceeding or in a separate court action in a nonjudicial foreclosure proceeding, plan on paying an up-front retainer of several thousand dollars, whether you use a bankruptcy or a real estate attorney.
One way to get help from a lawyer—and pay less—is to pay only for specific tasks. Some lawyers will agree to perform certain limited tasks for you instead of taking responsibility for the whole matter. This is called offering unbundled services. For example, if you file for bankruptcy without a lawyer’s help, and then your lender asks the court to let it proceed with a foreclosure, you might be able to hire a lawyer just to oppose the lender’s request.
The fee will vary depending on the complexity of the task and the lawyer’s enthusiasm for providing unbundled services. An attorney might charge only a few hundred dollars to help you negotiate with your lender. And if you want an attorney to represent you in a judicial foreclosure case where you have no serious challenge to the foreclosure but just want to delay the inevitable, the fee will likely be hundreds of dollars instead of thousands.
As a general rule, you should hire an attorney for an unbundled service whenever the amount of the dispute justifies the fee. If a creditor objects to the discharge of a $500 debt, and it will cost you $400 to hire an attorney, you may be better off trying to handle the matter yourself, even though this increases the risk that the creditor will win. But if the dispute is worth $1,000 and the attorney will cost you $400, hiring the attorney makes better sense.
Unfortunately, many bankruptcy attorneys do not like to work on a piecemeal basis. They worry that by doing a little work for you, they might be on the hook if something goes wrong in another part of your case—that is, if they are in for a penny, they are in for a pound. Also, the bar associations of many states discourage lawyers from providing unbundled services. On the other hand, some state bar associations are encouraging attorneys to offer unbundled services simply because so many people can’t afford full representation.