Bankruptcy Lawyers: Purpose, Process, Costs, and More
A bankruptcy attorney is essential if you want a successful, streamlined bankruptcy case. There are attorney fees to consider and this will increase the overall cost of filing for bankruptcy, but ultimately that attorney will be worth their weight in gold.
If you’re filing for bankruptcy in the near future, take a look at this guide. We’ll help you find a capable bankruptcy attorney and show you just why it’s important to hire the services of a legal professional.
How to Determine if you Need a Bankruptcy Lawyer
You can complete a bankruptcy filing by yourself and you will save some money in the process. But unless you’re experienced with the bankruptcy process and know how to deal with a bankruptcy court, it’s not advised.
Bankruptcy law is complicated and if you don’t have the right legal advice, it could prove to be a frustrating and fruitless endeavor. That’s why it always pays to hire a bankruptcy attorney when filing for any type of bankruptcy, saving yourself time and stress, and potentially increasing your chances of a successful discharge.
So, if you’re filing for bankruptcy and don’t have the knowledge or experience, you need a bankruptcy attorney. This is true even if you have filed in the past. Personal bankruptcy filings are nearly twice as likely to succeed when a bankruptcy attorney is involved—that statistic alone should be enough to convince you.
When Should you File for Bankruptcy?
Every year, over half a million Americans file for bankruptcy. It’s something that has become an integral part of the economy, the cycle of easy credit and crippling debt that millions of Americans find themselves in. However, very few people actually understand the bankruptcy process.
Many people underestimate this process, seeing it as a cop-out, a way to excuse yourself of your responsibilities as soon as things become too much for you to handle. But that couldn’t be further from the truth.
Bankruptcy can do some serious damage to your credit score and it will remain on your credit report for up to 10 years. What’s more, if the bankruptcy court doesn’t believe that you have exhausted all other options, your case may be dismissed. If you keep applying in the hope of being accepted, you may be dismissed with prejudice, which will prevent you from filing for a fixed period of time.
Bankruptcy, therefore, is only something you should consider when you’re confident that nothing else will work, because only then will you have a chance of receiving a successful discharge.
Work with a debt relief agency, speak with your creditors, sell some of your assets, and try to improve your financial situation on your terms. If all that fails and you can genuinely say that you tried your best, it may be time to file bankruptcy.
How Much Does a Bankruptcy Lawyer Charge?
Attorney fees vary from law firm to law firm and from case to case, however, there is some consistency and reliability here. A bankruptcy attorney will charge you between $1,500 and $2,000 on average for a Chapter 7 filing and between $3,000 and $4,000 for a Chapter 13 filing.
The national averages are $1,250 and $3,000 respectively, but you can expect to pay a lot more in major cities like New York and Los Angeles. These fees will cover you for the filing and most of the processes involved with it. However, if someone files an adversary proceeding, things get a little more complicated and the fees begin to escalate.
Fortunately, these proceedings are rare.
Can I do it Myself?
Despite everything that we said above, there will no doubt still be a few individuals who try to do it themselves. After all, $4,000 is a lot of money if you’re in a difficult financial situation (which you clearly are) and it’s tempting to try and go it alone.
However, doing so may cost you more in the long-term. In some major cities, the success rate for Chapter 13 with legal representation is slightly better than 1 in 2. The success rate for “pro se”, a term used to denote cases that are not represented by attorneys, is between 1 in 2000 and 1 in 2500.
If you fail, wait and then try again, and you stay in this cycle until you file successfully, you’ll pay a lot more in filing fees and other costs than you would from simply hiring a bankruptcy attorney in the first place.
Benefits of Hiring a Bankruptcy Lawyer
In addition to the improved success rate, which we discussed above, there are several other benefits to hiring a bankruptcy attorney that you simply won’t get from choosing the “pro se” option.
Selecting the Right Option
A bankruptcy lawyer can help you find the right bankruptcy code. Chapter 7 is the most common type of bankruptcy in the United States and will seek to liquidate all of the debtor’s assets and use the funds to repay creditors. It’s quick, it’s all-encompassing, and it’s pretty brutal. Chapter 13, on the other hand, aims to create a repayment plan that ensures creditors are repaid over 3 to 5 years.
The attorney will look at your assets, savings, income, debt, and other aspects to determine what the right option is.
Knowing What to Expect
An attorney has been through the bankruptcy process countless times. They know what to expect around every corner and can prepare accordingly, allowing for a quicker and simpler process.
They can also advise you with regards to exemptions, dischargeable and non-dischargeable debts, tax implications, and more. This knowledge extends beyond the bankruptcy filing and they can advise you with regards to future credit and debt issues.
No More Harassment from Collectors
Debt collectors can (and will) contact you while filing for bankruptcy. However, once you have an attorney on your side you can simply tell them to deal with your lawyer. You don’t have to stress about things anymore and can just brush everything off onto your representative.
What to Look for in a Bankruptcy Lawyer
Thanks to the internet, it has never been easier to find the right person or company for the job and this applies just as much to attorneys and law firms as it goes anything else.
Many individuals still prefer to go the old-fashioned route and get advice from friends and family. This is not ideal, as you’re taking advice from one person based on one experience. Unless they worked with other bankruptcy attorneys and have something to base their opinions on, you have no real way of knowing whether or not those opinions are valid. However, it can help you to begin your search, after which you should check online review sites, social media, and other information to determine if the attorney meets all of the following criteria:
- Experienced: What cases does the firm or lawyer handle, how experienced are they? You want an attorney who has been in the business for a long time and can prove that they have helped with countless filings in that time.
- Capable: It’s rare for an incompetent attorney to remain in business for more than a few years, so if they have been active for over a decade it suggests they are more than capable of doing their job.
- Affordable: How much do they charge and are they upfront about these fees? Do they offer any kind of free or discount consultation, are they expensive, are they vague? In many cases, a law firm that is vague about their pricing will charge eye-watering sums even for the briefest of encounters, so look for transparency and affordability.
What to Look for During a Consultation
Look for free consultations and speak with several lawyers. It won’t cost you anything except for a few moments of your time and it could give you some valuable insight into their practices and your finances. You’ll know which service is right for you after these consultations.
To make sure you provide the attorneys with everything they need, keep the following in mind:
- Availability: Can you speak directly with the lawyer in charge or do you keep getting brushed off on a paralegal? Does it take days for them to return your calls? These are not great signs and suggest your case may not receive the care and attention it deserves.
- Listen: They should listen to your ideas and be willing to explore options that you bring to the table. If these are unfeasible, they should explain why that is the case and not simply dismiss them out of hand. A lawyer that is confident in his or her own abilities will happily listen to what the client has to say and then advise accordingly. One who is not, will insist on doing things by the book and become uncertain when you stray.
- Remain Concise: A good lawyer will explain your situation and the bankruptcy process in clear English. They won’t baffle you with legalese and will ensure that when you leave the consultation, you know exactly what is expected of you. If you have more questions than answers and every question is met with a wall of double-speak, it might be time to look elsewhere. After all, bankruptcy is very personal and if you don’t understand what’s happening, something’s amiss.
Lawyers, Pro Se, and Debt Relief
As discussed already, bankruptcy is rarely the only option. In fact, it’s often only a possibility when it really is the only option and when debt relief opportunities have been exhausted. But it’s also a headache that can remain for years, doing damage to your credit score, credit report, and sanity.
There are many things to consider before jumping in, including non-exempt assets and fees. The bad news is that a lawyer won’t make this process easy for you and they won’t reduce the damage done to your score in the long run. The good news is that they will make it easier, dealing with the bankruptcy trustee, creditors, and the court, and that alone makes them worth their fee.
Do your research about bankruptcy, look into the cost and process of acquiring legal services, hire the right person for the job, and do everything that they ask of you. Once you do, then you should see some improvement in your financial state.