Most bankruptcy cases are not complicated. There are several books that allow the debtor to file for bankruptcy pro se (aka in pro per) by representing himself. These books give step-by-step procedures for filling out most of the forms of a bankruptcy petition, and handle some of the most common problems that arise for most debtors. Nonetheless, there are many people who do not feel comfortable representing themselves, especially since they have never fully witnessed the process. Some debtors may also have problems that are more complicated or not routine, and that may require the services of a bankruptcy attorney.
In addition to the attorney's fee, there is the court fee for filing the bankruptcy petition — $274 for Chapter 13 filing and $299 for a Chapter 7 — and also the fees for credit counseling and personal debt management, which, combined, will usually total about $100.
Generally, an attorney giving full representation to a debtor will file the bankruptcy petition electronically and get most the information about the debtor's creditors from his credit reports.
A bankruptcy lawyer can also help the debtor to file or respond to motions, which are requests to the court by the debtor or other party-in-interest, usually a creditor, to take some action or to rule on a contested statement.
An attorney can also ensure that there are no problems with the bankruptcy petition, not only with the forms themselves, but also with any appraisals or other requirements that the judge or the trustee may require, because the lawyer generally knows what they want.
Bankruptcy lawyers can provide varying levels of assistance, depending on the needs and the finances of the debtor. A bankruptcy lawyer can help the debtor, either by fully representing him or by providing assistance for a particular problem that the debtor does not feel comfortable handling himself. If there are no unexpected problems, full representation will probably cost around $1,600 - $2,500 for a chapter 7 bankruptcy case, and $2,500 - $4,000 for a chapter 13 case. Furthermore, the money for a chapter 7 case must be paid up front — otherwise the debt to the lawyer could be discharged — but the fee for chapter 13 case can be included in the debtor's repayment plan, although most attorneys will want part of the fee upfront.
Some of the questions that should be asked when shopping around for bankruptcy lawyers include:
- the amount of their fee;
- whether the fee must paid up front, or, for a chapter 13 filing, whether the fee can be included in the repayment plan, which is allowable by law; however, some attorneys require an upfront fee, nonetheless.
Although the fees charged by lawyers are not as strictly regulated as the fees of a bankruptcy petition preparer, the legal fees cannot be excessive or the bankruptcy court can force an attorney to lower their fee, if it deems it to be excessive. Bankruptcy Rule 2016 requires that the attorney disclose her compensation to the bankruptcy court. To comply with the rule, the courts have developed Form B203, Disclosure of Compensation of Attorney for Debtor, which must be submitted with the bankruptcy petition, so that the judge will know exactly how much is being charged.
Generally, the fees should cover the routine tasks that are part of every bankruptcy, including:
- counseling, preparing and filing the bankruptcy petition,
- attending the creditors meeting,
- and for a Chapter 13 petitioner, detailed writing up the Chapter 13 repayment plan and attending the confirmation hearing with the debtor.
The lawyer will probably ask the debtor to bring tax returns, pay stubs, bills, and any other documents that would accurately reflect his financial position.
The Rule 2016 disclosure form includes all the tasks that are included in the fee and any common bankruptcy task that is not included; any task not listed or specifically excluded will probably be subject to a separate fee. If the attorney does charge an additional fee, then she must file a supplemental form to ask the court's permission for the additional fees.
Tips for Selecting a Bankruptcy Lawyer
Since debtors filing for bankruptcy generally don't have much money, it is probably best, when selecting a lawyer, to shop around for the lowest price. Although the quality of a lawyer may be very important in a complex case, such as for an auto accident, bankruptcy is mostly routine, and virtually any lawyer who specializes in bankruptcy should be able to competently perform all the duties necessary. Indeed, most lawyers simply have their legal secretary fill out the forms.
It would help to be familiar with bankruptcy procedure, so that you can explain to the lawyer exactly what your case involves, and what may be a problem. For instance, if you are filing for Chapter 7 and do not have any nonexempt assets, informing your prospective lawyer of this will allow her to give you a much better estimate of the cost reflecting the work that will probably be required. If the attorney is unwilling to give you an accurate quote over the phone or in response to email, then continue your search, since the lawyer is probably not being honest, and simply wants you to go her office rather than continuing to shop around.
A good way to search for a lawyer is to use a search engine such as Google, and type in terms bankruptcy lawyer and your county or zip code, then print out the list and call each one. Not only can you get a better idea of what prices they charge, but you can see how they respond to your phone call:
- Are they helpful?
- Can you talk to the lawyer herself?
- Is she friendly?