|Low: An Attorney Handling a Straightforward Chapter 7 Can Start $600-$1,000||Medium: An Attorney Handling a Chapter 13 Can Run $1,200-$3,500+|
Bankruptcy laws are intended to give a fresh start to people who can't pay their debts. Often referred to as a consumer bankruptcy, a personal bankruptcy is a legal process in which the court administers the property and other assets (referred to as the estate) of an individual or a married couple (the debtor) for the benefit of creditors. The most common types of personal bankruptcy are Chapter 7 -- a straight bankruptcy for those who have little or no hope of repaying their debts (there are eligibility requirements) -- and Chapter 13 (sometimes called "wage earner bankruptcy") -- is a reorganization process allows someone with a steady income some "breathing room" to keep their assets while setting up a plan to repay a portion or all of their debt.
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- Bankruptcy attorneys may charge a flat fee for specific services or an hourly rate of $100-$300 or more. Some require payment in full in advance while others may accept a lower advance fee plus installment payments.
- Hiring an attorney to handle a straightforward Chapter 7 personal liquidation bankruptcy starts around $600-$1,000 for some attorneys in low-cost locations, but elsewhere averages $1,000-$3,000 and up, depending on the facts of the case.
- Hiring an attorney to handle a Chapter 13 personal reorganization bankruptcy runs about $1,200-$3,500 and up, depending on location and circumstances. Some of the legal fees for a Chapter 13 bankruptcy can be paid in installments as part of the bankruptcy payment plan required under Chapter 13.
- The bankruptcy court filing fee is $299 for Chapter 7 and $274 for Chapter 13, but (depending on your location and circumstances) you might be eligible to apply to pay the fee in installments or have it waived.
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- In most cases, bankruptcies are filed in federal district court; bankruptcy cases cannot be filed in state courts. Federal bankruptcy law is organized into chapters that govern specific types of bankruptcy proceedings. Debtors may file for straight bankruptcy under Chapter 7, which liquidates certain assets and discharges (eliminates) any debts; or for a reorganization bankruptcy under Chapter 13, which creates a plan to repay the debts over time. Creditors can force a debtor into an involuntary bankruptcy under Chapter 7, but Chapter 13 bankruptcy is purely voluntary. USCourts.gov outlines bankruptcy basics for the different kinds of bankruptcies, as well as a glossary of common bankruptcy terms.
- The bankruptcy process generally takes about 4-6 months, although it varies depending on circumstances. State law does apply to some aspects of the consumer bankruptcy process, and requirements vary. Lawyers.com summarizes consumer bankruptcy laws by state.
- Bankruptcy is an extremely complicated process. BankruptcyVisuals.com offers charts of the standard procedures for Chapter 7 and 13.
- The American Bar Association sells a Guide to Credit & Bankruptcy for consumers for $16.95.
Shopping for personal bankruptcy:
- You can cut costs a bit by not having your lawyer attend the meeting of creditors with you; check with your attorney to see if this is a viable option in your state.
- Ask potential bankruptcy attorneys about their training and experience, and request references from a bank, other lawyers and several certified public accountants who have worked with that attorney. Lawyers.com offers tips for selecting a bankruptcy attorney and then preparing to meet and meeting with a bankruptcy attorney.
- Search the American Board of Certification for attorneys certified as specialists in business bankruptcy, consumer bankruptcy and creditors' rights law. Bankruptcy lawyer referrals are also available from Lawyers.com and FindLaw.com .
- Your attorney should provide you with a written fee agreement. Be sure you understand what you will owe, and when.
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