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How much does a lawyer charge for Chapter 7?

We explain how much a lawyer charges for Chapter 7 bankruptcy and what other legal fees you should be aware of in this article.

evident Editorial Team
June 21, 2023
piggy bank, chapter 7 costs

Chapter 7 bankruptcy often offers a fresh start for those burdened by overwhelming debt. But one crucial question for many individuals is, "how much does a lawyer charge for Chapter 7?" 

Understanding attorney fees and overall bankruptcy costs is essential to navigating this complex process. While bankruptcy can offer a financial reset, it comes with expenses that you should understand from the outset. 

This article provides a comprehensive guide to the costs associated with hiring a bankruptcy lawyer for a Chapter 7 filing. 

Key Takeaways

Understanding Chapter 7 Bankruptcy

Chapter 7, sometimes called “liquidation bankruptcy,” is one type of legal procedure to erase most of your unsecured debts. Under U.S. bankruptcy law, Chapter 7 bankruptcy allows the debtor to discharge debts they are unable to pay. 

The process begins when you file a petition with the bankruptcy court. A bankruptcy trustee is then appointed to administer the case, liquidate non-exempt assets and distribute the proceeds to creditors. However, most Chapter 7 cases are "no-asset" cases where the debtor doesn't have any non-exempt property for the trustee to sell. 

Filing for Chapter 7 requires careful planning and adherence to strict procedural rules, which is why an experienced bankruptcy lawyer can be a valuable resource. They can guide you through the bankruptcy process, ensure all paperwork is filed correctly, and represent you in court.  

Given the complex nature of Chapter 7 bankruptcy, understanding the associated costs, including attorney fees, is crucial.

Factors Influencing the Cost of a Bankruptcy Lawyer

When it comes to hiring a bankruptcy lawyer for a Chapter 7 case, costs can vary greatly. Several factors influence how much bankruptcy lawyers charge.

  1. Complexity of the Case: Complex cases that involve large amounts of debt or multiple types of debt can result in higher legal fees. For example, if you have business debts or face potential lawsuits from creditors, your bankruptcy lawyer may need to spend more time on your case.
  2. Geographic Location: Bankruptcy attorney fees can also fluctuate based on where you live. Metropolitan areas with a higher cost of living generally have higher Chapter 7 attorney fees, though prices may also be influenced by the availability of bankruptcy lawyers in your area. 
  3. Attorney's Experience and Reputation: More experienced attorneys, especially those with a strong reputation in bankruptcy law, may charge more for their services.

Some courts set a "presumptively reasonable fee," which is a guideline for what constitutes a reasonable attorney fee in Chapter 7 cases. The presumptively reasonable attorney fee varies by jurisdiction and can also influence what an attorney may charge.

How do bankruptcy lawyers charge for their services?

Bankruptcy attorneys usually charge either a flat fee or an hourly fee. 

A flat fee is a set amount covering most services related to the bankruptcy. An hourly fee, as the name suggests, is based on the actual time the attorney spends on your case.

Remember that these fees will ultimately be influenced by the same factors discussed above. (For instance, bankruptcy lawyers in Ohio charge $302 per hour on average compared to $403 per hour in New York). 

There are pros and cons to either billing method, namely the certainty of a flat fee versus only paying for the time your bankruptcy lawyer actually spends working on your case. 

Pros and cons of flat fees and hourly fees

Average Costs of Filing for Chapter 7 Bankruptcy

When considering Chapter 7 bankruptcy, it's essential to factor in all the costs involved, not just attorney fees. Here's a breakdown of the average expenses you might expect:

  1. Filing Fees: As of 2023, the court filing fee for a Chapter 7 case is $338. Court filing fees are paid directly to the court when the bankruptcy petition is filed, though you can request a fee waiver or to pay the fee in installments if you need help paying the filing fee. 
  2. Credit Counseling and Personal Financial Management Courses: The bankruptcy law requires all debtors to complete credit counseling before filing and a personal financial management course before the discharge. These courses usually cost between $20-$50 each.
  3. Attorney Fees: The most significant cost is typically the Chapter 7 attorney’s fee. The cost for a Chapter 7 bankruptcy attorney typically ranges from $1,000 to $2,500, depending on the complexity of the case and your location.

Some bankruptcy attorneys offer payment plans, allowing you to spread out the cost over time. Remember, these are average costs. The actual costs may be more or less depending on your situation and the lawyer you hire. 

Before hiring a bankruptcy attorney, it's wise to get a clear understanding of all the costs involved in your case.

Tips on Selecting an Experienced Bankruptcy Lawyer

choice, select, decide

Selecting the right bankruptcy attorney is just as important as understanding the associated costs. Here are a few tips to ensure you make an informed choice:

  1. Do Your Research: Start by looking at bankruptcy lawyers in your area. Consider their experience, reviews, and reputation in the field. 
  2. Don't Just Go for the Cheapest: While it may be tempting to go for the cheapest bankruptcy attorney, remember that you often get what you pay for. An inexperienced attorney might end up costing more in the long run if they make errors or overlook key details.
  3. Ask About Their Fees Upfront: Ask potential attorneys how they calculate their fees – is it a flat fee or an hourly rate? Make sure they clearly explain what their fee includes.
  4. Ensure They Specialize in Bankruptcy Law: Not all attorneys are well-versed in the intricacies of bankruptcy law. Ensure your lawyer has specific experience in handling Chapter 7 bankruptcy cases.

The Bottom Line

So, how much do lawyers charge for Chapter 7? Bankruptcy attorneys’ fees typically range from $1,000 to $2,500 but vary depending on your location, the attorney’s experience, and the complexity of your case. 

Other bankruptcy fees may be associated with your case, such as filing fees and mandatory educational courses.

Balancing attorney fees with the potential for financial relief is crucial. Remember, an experienced bankruptcy attorney is an investment toward achieving your financial fresh start. 

Chapter 7 Bankruptcy FAQs 

1. How much do you pay back in Chapter 7?

In a Chapter 7 bankruptcy, you generally don't have to pay back any portion of your unsecured debt unless it falls under exceptions like spousal support or taxes. However, you may need to surrender certain non-exempt property to the bankruptcy trustee.

Debts you may still be responsible for paying include:

  • Alimony
  • Child support
  • Debts you owe to the government, such as fines or certain tax debts

2. How much debt can be discharged in a Chapter 7?

There's no upper limit to the amount of debt that can be discharged in a Chapter 7 bankruptcy. It can be an effective tool for eliminating most or all of your unsecured debts, such as credit cards and medical bills.

3. How long does Chapter 7 stay on your credit report?

A Chapter 7 bankruptcy can stay on your credit report for up to 10 years from the date of the bankruptcy filing. However, its impact on your credit score will gradually lessen over time as you rebuild your credit, and many people actually see their credit score improve if their score is below 600.