When declaring bankruptcy, the last thing you want to think about is paying a lawyer. However, every legal representative deserves compensation. Entering the bankruptcy process knowing what to expect will ease the sting of being charged for resolving debt as a lawyer. Here’s what you should be aware of regarding costs associated with bankruptcy lawyers.
Different Types of Bankruptcy Lawyer Fees
It’s typical for bankruptcy lawyers to charge flat rates for their work. Regardless of how much time your legal representative invests in your case, you’ll be billed a set amount. Before hiring someone to represent you, find out exactly how much you’ll owe.
Hourly rates are less common. Under these agreements, extra work, such as defending against a creditor’s objection to having payment obligations discharged, will accrue additional fees. Your contract should clearly spell out conditional circumstances.
Chapter 7 Bankruptcy Lawyer Fees
The amount you can expect to pay for filing Chapter 7 depends upon how complicated your case is. If you have a lot of assets, you’re likely to pay a greater amount than someone who doesn’t own anything at all. Compare your lawyer’s rates with those who perform similar work in the area to figure out if you’re getting your money’s worth.
lawyer fees for declaring Chapter 7 typically range between $1,000 and $3,500. Bankruptcy lawyers who offer personalized service tend to have higher rates. Newer lawyers typically charge less. Think carefully about the type of lawyer you need and balance that variable against your budget.
Chapter 13 Bankruptcy Lawyer Fees
When individuals file for Chapter 13, courts often have limits on how much their lawyers may charge. Although limits differ between districts, they typically fall within $2,500 and $6,000. Like with Chapter 7, complex cases tend to land higher amounts. If you own a business, for example, you should expect to pay more.
Paying Bankruptcy Lawyer Fees
If you’re filing for Chapter 7, it’s expected that you pay your lawyer’s fees in full before your petition is filed. The reason for this is that Chapter 7 wipes away the majority of unsecured debt, including lawyer’s fees.
Declaring Chapter 13 is different. In most cases, you will not be required to pay upfront. That said, you’ll probably have to pay a portion of the agreement sooner rather than later. The remainder of what you owe can be rolled into a payment plan.
Bankruptcy lawyers can be helpful, but they need to receive payment for their services. Contact one with experience and ask about billing so that you aren’t taken by surprise.