You face an overwhelming financial situation and must consider filing for bankruptcy. You may feel at your wits’ end over your lack of fiscal security. If you are forced to file, you can work towards the best outcome and the most favorable terms possible. But to do that you’ll likely need the help of an experienced bankruptcy lawyer.
It may seem counterintuitive to agree to pay a lawyer when your savings account is at its lowest point or non-existent. So how much does a bankruptcy attorney cost you and where will that money come from?
How Much Does a Bankruptcy Attorney Cost?
In such dire financial circumstances, compiling more bills and expenses can seem like the worst possible move. The fact is you won’t be able to file for bankruptcy without incurring some costs to fulfill requirements and pay for services and court fees.
This expenditure can also include hiring an attorney to make sure your filing is completed accurately and correctly. Your legal counsel can also verify that your filing utilizes every advantage available to you. While this is an additional expense, it is generally in your best interest to do so. If you miss a deadline, fail to properly complete a form, or make another mistake, it can cost you your filing fees and jeopardizes your chances at a successful filing.
Filing Fees and Required Courses
Your first charge is for the bankruptcy filing fee. For a Chapter 7 filing in California, you’ll provide $338. For a Chapter 13 case, the fee is $313. Bankruptcy Trustees can also charge a small fee when you file.
The court also requires you to receive credit counseling before filing. This online course can cost anywhere from $25 to $50.
Then, after filing, you’ll complete a financial management course or “debtor education.” This course can cost anywhere from $19.99 up to $100.
Bankruptcy Lawyer Fees Vary
Fees assessed by bankruptcy attorneys can vary greatly depending on several factors. It can fluctuate depending on the state you live in. The size and diversity of your portfolio will affect the size of the fee. The degree of experience and case success your attorney has on their resume can also affect the price.
Location of Bankruptcy Filing
Location is one important factor in how much you’ll have to pay. California’s high cost of living and large metro areas put prices above average when compared to the rest of the U.S. Just like any other product or service, you may pay more in a big city than in a small town.
The Complexity of Your Bankruptcy Case
The more complications your case has the more an attorney may have to charge you. Having multiple properties and assets and earning a large yearly income can require a lot more skill and preparation on the part of the bankruptcy lawyer. Carrying a lot of recent credit debt can mean your case carries a higher level of difficulty.
You may be facing a foreclosure or divorce and have several business holdings that will factor in. These all can make for a very tangled web to sort out and present clearly for a bankruptcy court. The enormous amount of work can boost a bankruptcy attorney fee.
Experience of the Attorney
Keep in mind that cheaper is not always better.
You are seeking an attorney to make sure your case is handled correctly and to hopefully reduce the consequences of your bankruptcy. Hiring a lawyer with less experience, less attention to detail or even one with questionable motives can hurt you in the long run.
You may interview bankruptcy lawyers and inquire about their experience. You should look for attorneys who have experience in bankruptcy cases that share similar circumstances with your case. They should have successful cases from the past clearly on display and have references provided by previous clients.
Pro Se Bankruptcy Cases
The least expensive of all options is to file “pro se” which is to go without legal representation. This is almost always a poor choice when dealing with something as complex as bankruptcy law. You can mess up a tiny detail in your filing, have it tossed out, lose your filing fees, and have to wait years for another chance at filing.
In 2019, The Central District of California, encompassing Los Angeles, led the nation in self-represented bankruptcy filers. Over 15% of litigants filed by representing themselves compared to the national average of just over 8%.
In some years, Chapter 7 filers without an attorney have seen almost double the rate of dismissals. For Chapter 13 filers the outlook is even gloomier. Filing for Chapter 13 Bankruptcy without a legal representative can carry a success rate of less than 1%.
Attorney Fees Are Public Record
People filing for bankruptcy will be very vulnerable both financially and possibly emotionally too. Bankruptcy judges want to make sure filers aren’t taken advantage of.
With that in mind, lawyers are required to disclose what exactly they’re charging a client. The charge is considered public record in bankruptcy cases.
Excessive Attorney’s Fees
A Bankruptcy Trustee will see the attorney’s fee on a form called a “Disclosure of Compensation.” The trustee is responsible for reviewing the amount. If the fees appear excessive, the trustee can request the judge cancel the fee or return a part of it to the filer.
Average Chapter 7 Bankruptcy Attorney Fees
Flat Fees vs. Hourly Fees
The majority of attorneys accept a flat fee for their services in Chapter 7 and Chapter 13 bankruptcy filing. This price is agreed upon by the lawyer and the client and it should be in writing on a signed document. It should also spell out what’s not covered by a flat fee.
Less common is an hourly fee schedule. This bills clients for each hour the attorney and assistants spend researching and gathering documents for a bankruptcy filing. This agreement should also appear in writing and be clearly explained to the client.
Amount of Attorney Fees
For lawyers charging flat fees, the national average is around $1,500 – $1,800. That figure can be a good guide for residents in much of California. However, around big cities like Los Angeles and San Francisco, the price average is $2,000.
Payment of Chapter 7 lawyer fees can be made in segments if the attorney permits it. However, generally, the fees get paid in full before “filing day” arrives.
Average Chapter 13 Bankruptcy Attorney Fees
Chapter 13 bankruptcy lawyer fees will usually cost you much more than a Chapter 7 filing. Chapter 13 requires your lawyer to devise a three to five-year plan to pay off your debt. This plan is submitted to the court and a case can remain open for several years while the debtor pays off the agreed-upon debt.
The length and complexity of Chapter 13 cases can greatly affect the time and money an attorney invests while compiling a case.
NOLO.com surveyed readers to see what they paid for Chapter 13 legal services. In California, the lawyer fee ranged from $3,300 to $5,000.
That range of attorney fees depends on similar factors mentioned earlier in the Chapter 7 Bankruptcy section. The more complex your personal and professional life, the more difficult your Chapter 13 case can be. This will drive up the workload for your attorney and require a higher payout.
Chapter 13 Lawyers are not all created equal. Some will have an impressive resume of debt negotiation and positive outcomes. These lawyers will often charge more for their services, but will often know the ins and outs of California bankruptcy law to allow you to keep and protect more of your assets.
Watch Out for Bankruptcy Mills
There’s one last warning to remember when you venture onto the internet looking for a bankruptcy lawyer: Beware of Bankruptcy Mills. Some law firms choose quantity over quality when it comes to the bankruptcy industry.
These firms are known as “bankruptcy mills.” They take on as many bankruptcy cases as they can all to make a quick buck. Bankruptcy mills handle this incredible load of cases by skipping the personalized attention offered by competent law firms. Since they have no vested interest in their clients’ wellbeing, their work tends to be sloppy and can lead to disastrous outcomes.
You’ll know you’ve signed on with a bankruptcy mill when you notice that you never speak to the same lawyer twice, or you never speak to one. Your case can get tossed back and forth by a “team” of paralegals and assistants.
These unqualified office workers can easily botch the documents needed for your court filing and even have you facing fraud charges over a mistake.
On court day, you may meet up with an attorney you’ve never met or spoken to. Your attorney may know nothing about your case and quickly get your bankruptcy case thrown out.
Contact a Bankruptcy Lawyer Serving Los Angeles
Facing a tough financial stretch, you may have to consider hiring a bankruptcy attorney. You should not think of this as a personal failure. Plenty of people have relied on bankruptcy to get out of a difficult situation and plenty of people have rebounded and rebuilt their lives.
The bankruptcy attorneys with the Law Offices of Steers and Associates have worked with local residents from all walks of life to put together a successful bankruptcy petition and helped them emerge successfully on the other end of the filing process.
When you face bankruptcy in Los Angeles or anywhere across Southern California, please contact us as soon as possible. We offer a free and confidential consultation to anyone considering bankruptcy. Let us help you determine your best move.
Elena Steers, the founder of Steers and Associates, has worked on both sides of the bankruptcy process including working for the Chapter 13 Bankruptcy Trustee’s office. She now relies on that experience to find the best path forward for her clients. Take a moment and read about her extensive background.
You can find our online guide to bankruptcy here: The Ultimate Guide to California Bankruptcy
Elena Steers is a highly experienced bankruptcy attorney, the founder of Law Offices of Steers & Associates, and previously worked as a Bankruptcy Trustee Assistant at the Office of the Chapter 13 Trustee in Los Angeles. Her current affiliations include the State Bar of California, National Association of Consumer Bankruptcy Attorneys, and Central District Consumer Bankruptcy Attorneys Association.