When considering filing Chapter 13 bankruptcy, you should know how much it will cost. To better understand how much people pay their lawyers in these bankruptcy cases, we surveyed our readers across the United States and learned about their experiences. Here’s what we learned.
How Much Do Attorneys Charge for Chapter 13 Bankruptcy?
Our survey results tell us that readers paid their attorneys an average of $3,000 to handle their Chapter 13 bankruptcy cases. Most Chapter 13 filers (63%) paid $3,000 or less, but a significant number (30%) paid between $3,000 and $5,000.
Compare these figures to attorneys’ fees in a Chapter 7 bankruptcy case, which average $1,450. Lawyers charge higher fees for Chapter 13 bankruptcy than for Chapter 7 because these cases take longer (three to five years) and involve more work. For instance, in a Chapter 13 case, the lawyer has to represent you at a confirmation hearing, where a judge will approve or deny your repayment plan.
Expect to Pay More in 2023 and 2024
Our figures were gathered before inflation increased the costs of most goods and services. As a result, don't be surprised to be quoted an amount higher than what we've stated here, likely up to 25% more if bankruptcy legal fees track other attorney fee increases. Because prices vary, call several local bankruptcy lawyers to determine the average price in your area.
Chapter 13 Attorneys’ Fees Vary by Geographical Area
Bankruptcy lawyers usually charge a flat fee or a set amount that covers essential services from start to finish. Because the court has to approve your financial expenditures in Chapter 13 bankruptcy, including your lawyer’s fee, the judge will decide whether that fee is reasonable.
Many courts streamline this approval process by establishing a “presumptive” fee amount for their area. If your lawyer agrees to represent you for that amount or less, the court will automatically approve the fee without looking at the specific circumstances of the case, which is why it’s also called a “no look” fee. Presumptive fees vary by geographic region and the services they cover.
Where bankruptcy courts have established presumptive limits, most attorneys use them to set fees. However, a presumptive fee isn’t an absolute maximum. Lawyers can request a higher fee for cases requiring more work than usual (more below). Also, if a case becomes more complicated than originally expected, the attorney can ask the court to approve additional fees.
Some bankruptcy courts don’t use presumptive fees. Instead, the judge reviews each case to decide whether the attorney’s fee is reasonable based on the amount of work the case will require.
When You Might Pay More for Chapter 13 Attorney's Fees
You will probably pay more than the average if your attorney has to spend extra time strategizing on your behalf. That can happen for different reasons, but here are some examples.
Special requests. If you want to wipe out your student loans or one of the mortgages on your house (when you owe more than it’s worth), you’ll need to file a separate lawsuit or motion within the bankruptcy case. Your lawyer will charge more for this.
Involvement in a lawsuit. If you’re involved in litigation when you file for bankruptcy, it could turn the initial meeting with creditors or the “341 meeting” from a routine step into a hornet’s nest. An experienced attorney will charge more to protect you, but it’s probably worth it.
Business owners. If you’re the sole proprietor of a business, your attorney must prepare financial documents for you and your business. All of this takes time.
When You Might Pay Less for Chapter 13 Attorneys’ Fees
When attorneys use a local court’s presumptive fee to set the amount they charge, it’s unlikely they’ll be willing to give you a discount. Even so, you can still try to negotiate the overall fee. Here are a couple of other things that might convince an attorney to give you a financial break:
Being organized. Before your initial consultation, ask the attorney for a list of the documents needed to prepare your case. Assemble the documents and bring them to your appointment. If you have everything ready to go, you’ll stand a better chance of receiving a discount.
Not having many creditors. Our survey showed that the total debt readers owed didn’t affect how much they paid for their lawyer’s fee. However, the number of creditors could make a difference because more creditors mean more potential problems and more work. You might be able to get a discount if you have less than five (or even ten) creditors.
Not requiring extra work. When you talk with the attorney, ask what has to happen before the judge approves your repayment plan. If your case is simple and the list is short, the lawyer might agree to discount the fee.
Chapter 13 Attorneys’ Fees Need Not Be Paid All at Once
The most common way of paying a lawyer’s flat fee in Chapter 13 bankruptcy is to make an initial down payment before the bankruptcy petition is filed, with the remainder of the fee included in your monthly payments under your repayment plan.
Example: Brian consults with an attorney and learns that he can solve his financial problems in Chapter 13 bankruptcy by making a $500 payment every month for five years. He agrees to pay the lawyer a fee of $2,500 and puts down an initial deposit of $1,000. During the case, the bankruptcy trustee, the person overseeing the case, will pay Brian’s attorney a certain amount (often $100 per month), with the remaining $400 going to Brian’s creditors. After the $1,500 balance for the lawyer’s fee is paid off (probably 15 months later), the trustee will pay the creditors the total $500 each month.
In some cases, however, the attorney might ask you to pay the full fee upfront.
What Services Are Included in Your Chapter 13 Flat Fee?
Before agreeing to a flat fee, ensure you know what will be included. In addition to filing your bankruptcy petition and representing you at the 341 meeting of creditors and repayment plan confirmation hearing, your attorney’s flat fee might include services like filing certain motions or making changes to the petition, schedules, or repayment plan. It might also include representing you if, for example, a creditor asks to remove the bankruptcy stay (which stops collection activities during the bankruptcy).
Other Fees and Costs in Chapter 13 Bankruptcy
Here are a few other expenses you’ll have to pay in your Chapter 13 bankruptcy:
Filing fees. In addition to the fees you pay your attorney, you’ll have to pay the bankruptcy court’s filing fee of $313 (as of December 2020). The court doesn't waive fees in Chapter 13 cases because they're meant for higher-income filers.
Bankruptcy counseling courses. Before completing your bankruptcy case, you must take two counseling courses, one before you file your petition and one afterward. These courses should cost no more than $60. Providers must offer discounts for people with lower incomes.
State-by-State Information on Chapter 13 Attorneys' Fees
You should be able to find current information about the presumptive attorneys' fees in your jurisdiction on your court's website. If you don't know which court to file in or need the court's website, use the court locator tool. Almost all bankruptcy courts have websites with links to their presumptive fees and fee guidelines.
