Bankruptcy Lawyers
What is bankruptcy?
Bankruptcy is a legal process initiated by a debtor to get debts discharged or reorganized in order to obtain relief. In the United States, there are two main types of personal bankruptcy:
Chapter 7 bankruptcy, also known as liquidation bankruptcy, allows qualifying debtors to have their unsecured debts, such as credit cards, personal loans and medical debt, discharged (that is, eliminated).
Chapter 13 bankruptcy, also known as reorganization bankruptcy and originally known as “wage earner” bankruptcy, allows debtors with secured debts, such as a mortgage or car loan, to stop collection actions or repossession and develop a repayment plan to get caught up.
Bankruptcy itself is governed by federal law and cases are heard in federal court, but state law controls exemptions from bankruptcy (that is, which assets don’t have to be liquidated). State laws may also affect other aspects of the relationship between a debtor and a creditor that can in turn affect bankruptcy proceedings.
What does a bankruptcy attorney do?
A bankruptcy lawyer counsels debtors on their legal options and represents them in bankruptcy court proceedings. A bankruptcy attorney may:
- Intervene to stop repossession or foreclosure, or to recover repossessed property.
- Advise clients on whether bankruptcy is the best option for their financial situation and if so, whether filing Chapter 7 or Chapter 13 is more advantageous.
- Advise clients on whether to file individually or jointly with a spouse.
- In Chapter 7 proceedings, find ways to protect the client’s most important assets.
- In Chapter 13 proceedings, help to create a repayment plan that the client can afford.
- Prepare paperwork documenting the client’s income, assets, debts, and expenses.
- Represent the client in court hearings and other legal proceedings.
An effective bankruptcy attorney is part lawyer, part counselor and part financial advisor. Their job is to guide clients through a confusing and often emotionally challenging process, remaining focused on a financial reset and a better future.
How much does a bankruptcy attorney cost?
Attorney’s fees vary depending on the attorney’s level of experience, the jurisdiction, and the complexity of the case. In general, Chapter 7 attorney’s fees range from $1,000 to $3,500. This fee may be paid in a lump sum or in installments, but it usually must be paid in full prior to the filing; otherwise, it would become another debt that would be wiped out by the bankruptcy itself.
Chapter 13 bankruptcy is usually more complex and costly, with fees ranging from $2,500 to $6,000. However, the entire fee generally does not have to be paid before filing; the attorney will usually ask for a portion before filing, and the remaining fee will be rolled into the Chapter 13 repayment plan.
How do I choose the right bankruptcy lawyer?
In general, it’s important to choose an attorney who has experience handling bankruptcy proceedings in your state, as they will be familiar with the specific exemptions and other state laws applicable to your case. Having a high level of comfort speaking with your attorney is critical, since you will be discussing sensitive financial matters and making tough decisions together.
Many bankruptcy attorneys offer a free consultation, so there is little to lose by getting some answers about your legal and financial options. If you are unable to keep up with your debt, exploring the possibility of a financial reset is well worth your time.
