How Are Bankruptcy Lawyers Paid When I Have No Money?

Understandably, there is often confusion in how to pay for a bankruptcy lawyer when you are so financially strapped. You likely wonder if you cannot pay your bills, how can you possibly afford to pay the attorney. Many bankruptcy attorneys provide an easy payment plan to ensure that the individual or family can afford to pay for the bankruptcy process.

While it is possible to file for bankruptcy without the assistance of a lawyer, it is not typically a wise move. This is because bankruptcy code is extremely complex. Navigating through the entire process will require an extensive amount of expertise and knowledge of the law. Because of that, hiring a competent lawyer should be the first priority in taking the steps to file bankruptcy.

Once the decision has been made that bankruptcy is the best option you can set aside funds that were previously used to pay down debts toward your bankruptcy lawyer fees. Typically, a skilled attorney works with their clients to ensure they have all the necessary basics covered while still being able to afford their bankruptcy filing. Because filing bankruptcy is not a public service, it is not free.

The more important question should be focused on whether you could afford the consequences and outcome if you do not hire a competent bankruptcy lawyer. Even the beginning process of filing a petition involves complicated forms, rules and procedures. Emerging from the bankruptcy process debt-free will remove the heavy burden from your shoulders and provide you the financial peace of mind you likely have not experienced for a long time.

Without the proper guidance of a skilled attorney, it is extremely easy to make damaging mistakes that in the end could lead to your bankruptcy case being dismissed by the court system. To successfully navigate through the entire process, you will need the skills of a competent bankruptcy attorney.

The Costs Involved

Your attorney will charge you a pre-determined amount based on the type of bankruptcy you select. Generally, the process of a Chapter 7 bankruptcy is usually significantly less than a Chapter 13. The costs involved are typically based on the amount of time your bankruptcy attorney will spend in court; along with the length of time they provide you legal representation. In addition, because a Chapter 13 bankruptcy has greater complexity in handling that successful outcome it is usually more expensive.

A Chapter 13 Bankruptcy

A Chapter 13 bankruptcy is designed to allow you to keep the majority of your assets by paying a reasonable amount based on a repayment schedule approved by the court system. The amount that an attorney will charge their client for a Chapter 13 bankruptcy will vary greatly based on geographical location. Generally, the amount should be a few thousand dollars for the extensive amount of time the lawyer will be representing you.

Overall, most Chapter 13 bankruptcies require three to five years to complete. Even if the amount appears to be high due to your financial situation, most bankruptcy attorneys will not require payment of the full fee before your case is filed. Most will work their fees into your bankruptcy repayment plan. This way, the majority of attorney fees will be paid directly by the bankruptcy trustee after filing your case. The trustee will recognize the attorney fees as another debt you owe, similar to all of your other creditors on file.

However, many lawyers require money up front for the federal filing fee to begin the process of bankruptcy. Any attorney that is willing to accept their payment of their fees in the repayment plan works to your benefit. In fact, they are taking a risk by performing most of their work before ever receiving payment. This provides a strong incentive that the attorney will move mountains to ensure that your Chapter 13 bankruptcy case will be confirmed and finally discharged.

A Chapter 7 Bankruptcy

There is a substantially less amount of work performed by the attorney in a Chapter 7 bankruptcy. Because less work is performed, the fees will be less. However, most attorneys expect to be paid in full before they file the case. This is because any unpaid fee that you owe your lawyer could be included in your Chapter 7 bankruptcy. This would leave your lawyer in a position where they would have no options for collecting their fee.

Like a Chapter 13 bankruptcy, the costs involved for hiring Chapter 7 bankruptcy lawyers will vary based on locale. However, typical costs could top out under a few thousand dollars. The attorney’s fees will be based on the estimated time it will take to move the bankruptcy through the system.

Based on your specific circumstances, your attorney will need to anticipate the amount of time they will spend on the case to set a price. Some attorneys do offer payment plans, but will often require an affordable retainer from you upfront for their services. Even though the retainer will not start the process of filing your case, it can provide you immediate relief from harassing collection calls by referring them to the law offices of your bankruptcy attorney.

Once you have retain the legal services of a skilled Chapter 7 bankruptcy law firm you can stop making payments to creditors that will be included in your bankruptcy filing. This process will immediately free up some of your funds to either pay your attorney in full or enter into an established payment plan on the remaining balance of the attorney’s fees. Some attorneys offer payment plans that last upwards of six months, while they prepare the petition for filing. Generally, once you have paid all of the attorney fees and provided enough funds for the federal filing fee your case can be filed in federal bankruptcy court.

There are simple solutions for paying bankruptcy lawyers when you have no money due to your financial situations. Their efforts can help you avoid repossession, garnishment or foreclosure of your assets by representing you through the legal process.

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