Paying Your Bankruptcy Lawyer: Costs and Types of Fees

Most people who hire a lawyer to file for bankruptcy pay a flat fee rather than by the hour. The amount you'll pay in attorneys' fees will depend, in large part, on whether you file for Chapter 7 or Chapter 13 bankruptcy and the complexity of your case.

Differences Between Flat Fees and Hourly Fees

Many attorneys, especially bankruptcy attorneys, will charge a "flat rate" to represent you in a bankruptcy case. You'll pay a fixed amount for the lawyer to represent you, regardless of the time spent on your case.

However, a flat fee won't include every matter that could arise. Your contract should spell out what the flat fee does and doesn't cover.

If your case is a typical "consumer" or nonbusiness bankruptcy case, the flat fee will include all tasks required in a typical case. This would include preparing and filing the petition and other bankruptcy forms, forwarding documents to the trustee, attending the 341 meeting of creditors, filing a debtor education certificate, and possibly handling a reaffirmation agreement.

You'd pay an hourly fee for any extra work required. For instance, your lawyer might need to respond to a motion, defend against an objection to discharge, or do some other task not commonly required in the average bankruptcy case.

Average Chapter 7 Bankruptcy Attorney Fees

Most Chapter 7 bankruptcy attorneys will base their fees on how complicated your case is and what other attorneys in the area would charge for a similar bankruptcy. If you have a lot of assets or debt or some other complicating factor, you might pay more than an unemployed person with no assets.

Attorneys' fees for a Chapter 7 bankruptcy range from $1,000 to $3,500, depending on where you live and the case's complexity. Larger firms with more advertising and overhead costs sometimes charge more than a solo practitioner, but not always.

Sometimes, more extensive practices offer low fees and count on a higher volume of cases. By contrast, a solo practitioner might charge more for more personalized service. It will depend on the office.

You can expect a newer attorney to charge less than a more experienced lawyer. If your case is a simple Chapter 7, you might not need an attorney with years of experience. However, remember that bankruptcy is a specialized area of law and that most attorneys who don't regularly practice bankruptcy won't accept a bankruptcy case.

You'll likely want to call a few attorneys in your area when shopping for a bankruptcy lawyer. Compare their fees and ask if bankruptcy is an area they specialize in, the number of years they've practiced, and how many cases they file each month.

Find out more about what to look for in a bankruptcy lawyer.

Paying a Chapter 7 Attorney

Don't expect a Chapter 7 lawyer to file your case immediately and accept payments afterward. You'll pay your Chapter 7 attorneys' fees in full before the attorney files the case—and with good reason.

Chapter 7 wipes out most unsecured debt in a Chapter 7 case, including attorneys' fees. So, if you were to owe an outstanding balance when your lawyer filed your case, it would get "discharged" or erased with other qualified debts. Chapter 7 attorneys know this and require full payment before they'll begin working on your case.

Average Chapter 13 Bankruptcy Attorney Fees

Most courts have guidelines for acceptable fees for a Chapter 13 bankruptcy. Unless exceptional circumstances justify it, an attorney won't be allowed to charge more than the court's guideline fee.

Chapter 13 guideline fees are different for each judicial district. However, depending on the case's complexity, they are typically between $2,500 and $6,000. For instance, if you own a business, the case will likely require more work and a higher fee.

Learn about small businesses in bankruptcy.

Paying a Chapter 13 Attorney

Debtors have more payment options in Chapter 13 because the Chapter 13 plan allows them to pay in installments. As a result, many attorneys won't require you to pay the entire Chapter 13 bankruptcy fee upfront. You can expect to pay for some of the fees before filing your matter and the remainder through your Chapter 13 repayment plan.

How much a bankruptcy lawyer will require before filing will depend on each attorney or firm. Some require as little as $100, but on average, you can expect to pay about half the total fee before the attorney files your case.

Disclosing Attorneys' Fees to the Court

Attorneys' fees in bankruptcy cases are somewhat unusual in that the lawyer must disclose fees to the court for approval. However, this doesn't mean the bankruptcy court limits the amount attorneys can charge in bankruptcy cases.

Attorneys are free to charge what is reasonable, given their experience and the complexity of the case, which is subject to review by the court. Some courts have a "presumptive" maximum fee for certain bankruptcy cases. Still, the attorney can overcome the ceiling by demonstrating a good reason for charging more.