15 Facts You Must Know About Bankruptcy Attorney Fees
What are Bankruptcy Fees?
1. Before hiring a bankruptcy attorney and subsequently filing for the financial relief available, you must first understand what bankruptcy is and evaluate how the claim can help your particular financial situation.
2. Bankruptcy is a financial program operated and administered by the Federal Government of the United States under Bankruptcy Law.
3. Bankruptcy claims are initiated by business entities or individuals who are struggling with debts, and more specifically, satisfying their repayments or loans to creditors. To alleviate this burden and offer a form of financial relief, an individual or business entity will file for bankruptcy.
4. Bankruptcy enables those in debt to seek relief through the creation of an alternative payment plan or a liquidation process. Liquidation (which is attached to a Chapter 7 filing) forces those in debt to sell off their secured assets. The proceeds from the sales are then used to help repay their loan requirements and debts.
5. Through the inclusion of a Government agency, those individuals and entities struggling with debts can reorganize their debt structure by making incremental payments to their creditors.
6. There are many different forms of bankruptcy filings, the most common being Chapter 7 filings, Chapter 11 filings, and Chapter 13 filings.
7. Each form of bankruptcy claim aims to alleviate the individual or entity in debt through different means. A Chapter 7 filing will immediately resolve debts through liquidation—the individual or entity’s assets are sold and the proceeds from the liquidation are used to pay off the debts owed.
8. A Chapter 11 filing is typically initiated by a business entity that is struggling with sales or earning a profit. A Chapter 11 filing enables the business to maintain its operation (through the appointment of a trustee), while developing repayment plans that are aligned with the company’s expected profits.
9. Lastly, a Chapter 13 Bankruptcy claim enables an individual or business entity to restructure their payment plan through the delivery of incremental pay periods. The incremental schedule is developed based on the debtor’s income, living expenses and the various amounts owed to the underlying creditors.
10. Each type of bankruptcy filing will require the services of a bankruptcy attorney or legal professional to facilitate the case. A bankruptcy attorney will streamline the case through the delivery of an advanced knowledge of bankruptcy law, as well as an understanding of the process.
11. All forms of legal aid require payment. Bankruptcy attorney fees refer to the amount of money a legal professional is paid by the debtor for assisting with the underlying case.
12. Bankruptcy attorney fees are typically in proportion to their experience—those attorneys who are more experienced are paid higher rates.
13. In most instances, bankruptcy attorneys will charge hourly rates and will fluctuate their pay scale based on the severity of the bankruptcy case and the amount of money in question. Those cases that are regarded as more complex will be more expensive.
14. As is common with most forms of legal aid, bankruptcy attorney fees are typically exorbitant. In most instances, a debtor is typically looking at a total bill of $2,000 to $3,000 in bankruptcy attorney fees.
15. Another variable in regard to bankruptcy attorney fees is found in what type of bankruptcy is being filed. The differences in payment stem from the varied processing times required for each form of bankruptcy. Typically, a Chapter 11 case is the most expensive form of bankruptcy. Chapter 7’s, 12’s and 13’s are considerably less in terms of bankruptcy attorney fees.