The role of an attorney in a Chapter 13 bankruptcy is significantly more involved than his role played in a Chapter 7 bankruptcy. The legal analysis required, amount of time spent in court, length of representation, and complexity are all greater than the responsibilities of a Chapter 7 bankruptcy attorney. Because of this, a Chapter 13 bankruptcy is typically more expensive than a Chapter 7 bankruptcy. The fees are also structured differently.
Cost of a Chapter 13 Bankruptcy Attorney
The cost of a Chapter 13 bankruptcy attorney varies geographically, but the typical fee is between $2200 and $3200 for the 3-5 years that the attorney will be representing you. The good news is that the majority of bankruptcy attorneys do not require the full fee before filing your case, and include the majority of their fees in the bankruptcy repayment plan. The attorney then gets paid by the bankruptcy trustee after your case is filed, similar to your other creditors. Some attorneys will only require the $274 federal filing fee to file the case and allow all of their fees to be paid through the plan. In this case, the Chapter 13 bankruptcy attorney is taking a risk by doing the majority of the work before getting paid and has a strong incentive to get your Chapter 13 bankruptcy getting confirmed and eventually discharged.
Cost of a Chapter 7 Bankruptcy Attorney
For comparison, lets take a look at Chapter 7 bankruptcy fees and how they are structured. Less legal work and attorney time are required in a Chapter 7 bankruptcy, so the fees are less, but are usually required to be paid-in-full before the case is filed. Otherwise, the fees owed to the attorney could just be included in the bankruptcy and the attorney would have no way of collecting his fees. The cost of a Chapter 7 bankruptcy attorney varies geographically, but typically are between $800 and $2500. The fee is based on the estimated amount of time the bankruptcy attorney anticipates spending on the case. Payment plans vary, but many firms allow you to retain their services for as little as $100. This won’t get your case filed, but can give you some immediate relief by allowing you to refer any collection calls to your bankruptcy lawyers office. After retaining a Chapter 7 bankruptcy attorney you can stop paying any creditors that you plan on including in your bankruptcy. Hopefully, this will free up some additional funds so you can enter into a payment plan with the bankruptcy attorney on the fee balance remaining. Payment plans as long as 4-6 months are not unusual. After the attorney fees and $299 federal filing fee are paid, your attorney will file your bankruptcy in Federal Bankruptcy Court.