While the average bankruptcy lawyer charges between $1,200 and $1,500 for Chapter 7 bankruptcy services, attorney fees can vary significantly. The actual cost you pay an attorney to prepare your bankruptcy depends on three primary factors: the area you live in, the complexity of your case, and the experience level of the lawyer you hire.
It would be simpler if bankruptcy attorneys all charged the same amount to handle a Chapter 7 case; but that doesn't happen. People pay anywhere from $500 to $2,200 for a Chapter 7 case, though most fees fall within the $1,200 to $1,500 range. Since fees vary, you might want to call several attorneys in your area to compare prices.
When it comes to legal services, the cheapest may or may not be the best, depending on your situation. There are other factors that affect how much an attorney charges to prepare your bankruptcy petition. For example, where you file and the complexity of your case significantly impact your filing costs.
To put it bluntly, the attorneys in some states charge a lot more for the same service than do lawyers in other states. This is why the most significant factor determining the amount your attorney charges you is where you live. For example, bankruptcy attorneys in Maine, Nevada, and New Hampshire charge significantly more than most attorneys do in other states. In fact, their fees for a Chapter 7 case are close to three times as expensive as the fees are in North Dakota, which is the cheapest state to file in.
Some bankruptcy chapters are also more complicated to file than others are, and because they need more work, they cost more. The most labor-intensive bankruptcies are Chapter 11 cases. A business that wants to reduce debt so that it can continue operating is given the chance to do so when it files this chapter, and it requires anywhere from $5,000 to $25,000 to start. Chapter 7 cases are the least labor-intensive and therefore are usully the least expensive to file. Chapter 13 cases fall between the two when it comes to both complexity and expense.
But Chapter 7 cases can vary in complexity as well, depending on the facts in your particular situation.
If you have a simple case, for example, you have one job, five credit card debts, and no assets other than a car and basic household belongings, an attorney may charge you less than average for your case.
If, however, you have a spouse, four kids, three jobs, gambling winnings, a mortgage payment, tax debt, a home in the Bahamas, and a variety of collections, your case will need more work. Because of that, you will likely pay more fees as well.
Seasoned lawyers are more sought after than attorneys straight out of law school. Newer lawyers may be willing to represent you for less money. While this may be a bargain if you have a simple case, it may cost you more in the end if you have a complicated situation that needs the wisdom that comes with experience. (Get tips on hiring the right bankruptcy attorney for your case.)
The court does not want people filing bankruptcy to pay too much in attorney's fees. To prevent this, attorneys must report the amount of fees they charge clients on a bankruptcy form called "Disclosure of Compensation." The trustee is responsible for reviewing the amount. If the fees appear excessive, the trustee can file a motion with the court asking the judge to either cancel the fee or return a part of it to you. You have the right to file a motion as well.
You should be aware that some bankruptcy providers make money by churning through as many bankruptcy petitions as possible. The law firms providing this type of service may not have the time to answer all of your questions or give your case the individualized attention it needs. One way to spot this type of operation is by finding out who works on your case. If a paralegal does the work and is your only real source of contact, you may have hired a bankruptcy mill. (Get tips on how to avoid a bankruptcy mill.)
In any case, it is a good idea to call several bankruptcy attorneys in your area to find out which attorney meets your needs the best.