Each year, hundreds of thousands of people file either a Chapter 7 straight bankruptcy or a Chapter 13 repayment plan case. The majority of them choose a lawyer to help them through the process and to ensure that they get all the benefits due them, and suffer none of the pitfalls of the unwary. If you don’t know how to choose a lawyer or where to go to find one, here are some helpful tips.
Do I Need a Lawyer at All?
It’s a question we bankruptcy lawyers hear all the time. “If I’m so broke, how can I hire a bankruptcy lawyer?” It’s true that many people wait until they’ve broken the piggy bank to call a lawyer, but there are strategies that can take some of the sting out paying for an attorney.
If you choose to file a bankruptcy case without a lawyer, the court will call that a pro se or pro per filing. In some districts in California, as many as 23% of the cases are filed without the assistance of an attorney. Nationwide, the rate is more like 8.8%, and most of those cases are Chapter 7 straight bankruptcy cases.
If your finances are simple, that might work for you. What do we mean by “simple”? If you don’t have a mortgage, a car loan, or any other kind of loan with collateral, and you don’t own much more than basic furniture, household goods, clothing and such. If you have any secured debt, you’ll have to deal with the creditor and decide whether to enter into a reaffirmation agreement or redeem the property.
To file on your own, you will also have to be thoroughly familiar with what property you can exempt from the reach of the court. If you’re filing a Chapter 13 case, you’ll also need to know about how Chapter 13 plans work and how to draft one.
Even for the simplest of cases, you’ll have to provide detailed information about your income, expenses, creditors, property, and financial transactions over the past few years.
If you're seriously thinking about filing a pro se case, we have a series of articles that discuss what to expect, starting with Filing Bankruptcy Without a Lawyer. Can or Should You?
Yes, I Want a Lawyer!
There are two kinds of bankruptcy lawyers. Some lawyers focus on working with individuals filing Chapter 7 and Chapter 13 cases. We call those consumer bankruptcy lawyers. Other lawyers work primarily with businesses to file Chapter 11 reorganization cases and Chapter 7 cases. Those we call a business or commercial bankruptcy lawyers. Although in general, anyone who practices bankruptcy is qualified to file both individual and business cases, the focus is different enough that most attorneys choose one over the other.
Bankruptcy Mills vs. Solo/Small Firm
Most consumer bankruptcy attorneys work in solo practices or with just a few other lawyers, a paralegal and other clerical helpers as needed. Some attorneys have worked to leverage the use of non-lawyer paraprofessionals. These lawyers rely very heavily on paralegal and clerical workers to do the bulk of the work, with one or a few lawyers supervising the staff. Some people call those bankruptcy mills. In a mill environment, you may not meet with an attorney until you sit down at your meeting of creditors about a month after the case is filed.
Bankruptcy mills do not necessarily charge less for their services than other attorneys. Fees are governed by the market and are reviewed by the US Trustee’s Office. You’ll probably find that most consumer lawyers in your area charge about the same amount.
In a bankruptcy mill, the roles within the firm are usually very specialized. You may deal with a paralegal who intakes your information, a paralegal who explains the process, a paralegal who helps you gather the information you need for filing a case, etc. You may deal with an attorney who handles the meeting of creditors, and a different attorney if you have any issues in your case. There are advantages to that model, but many former clients report that they felt like just another bankruptcy case and that no one really addressed their personal issues. For that, a traditional solo or small firm practice is ideal. It’s less of a corporate or assembly line feel, and much more hands-on personal attention by and access to your attorney.
If you become dissatisfied with your attorney after you file, check out this article: When You're Not Happy With Your Bankruptcy Lawyer.
Where Can I Find an Attorney?
There is no shortage of attorneys looking for an opportunity to provide services to you. They talk to your TV set during afternoon soap operas and stare down at you from billboards all over town. But it’s hard to know whether you should go with one of those guys who’s telephone number you’ve memorized from his advertising jingle, or whether you should dig deeper to find someone who might offer you more personalized service. Here are some good places to look.
If You're a Low Income Family
If your family income is less than 125% of the federal poverty guidelines, you may qualify for free services through Legal Aid or Legal Services Corporation. These nonprofit organizations provide civil legal services for people of very modest means. Their income requirements are pretty strict, but if you’ve been out of work for a while, are disabled, or on public assistance, it’s worth a look.
Bar associations in larger cities often have pro bono attorney projects the provide low cost or no-cost services to people who qualify according to income, employment, or medical status. Each program has its own criteria and availability of bar members willing to provide pro bono services. Here’s an example of a volunteer attorney program in Dallas, Texas. Here’s one in Duluth, Minnesota.
Many of my clients come to me through personal referrals. Former clients kindly pass on my contact information to their friends, coworkers, and relatives. If you want a personal recommendation from someone, you will most likely have to discuss your need, and some people find it uncomfortable to talk about their financial struggles. You may find, however, that many people close to you have either dealt with similar issues or know someone who has. By some accounts, over the course of a lifetime, one out of every ten adults will file a bankruptcy case. Think about that next time you’re sitting in the PTA meeting.
Of course, you can always approach people with the old inquiry, “I’ve got a friend in my Sunday school class who needs a bankruptcy lawyer. Do you know any?”
For many of us, our first stop when looking for a professional, whether it be a plumber, a doctor, or a lawyer, is the Internet. What happens when you search for “[your city] bankruptcy lawyer”? The first listings will be sponsored content. Those attorneys have paid for the privilege of appearing at the top of your search list. Some are bankruptcy mills, but others are solo and small firm practitioners. It’s hard to tell what you’re getting from the ads or even from their websites. Some of the best attorneys I know don’t purchase ads and don’t even appear on the first pages of search listings. A few don’t even have websites.
National Association of Consumer Bankruptcy Attorneys
One of the best online resources is the Find an Attorney feature on the website of the National Association of Consumer Bankruptcy Attorneys (NACBA). NACBA is the premier national trade association for lawyers who represent individuals in filing Chapter 7 and Chapter 13 cases. If you choose a NACBA member, you’re more likely to be working with someone who values the benefits of networking, keeping abreast of the latest changes in the law and important case decisions, and is active in the legal community.
National Association of Consumer Advocates
Another possibility is the National Association of Consumer Advocates, another trade association made up mainly of lawyers who practice consumer law. Many consumer lawyers also practice bankruptcy law.
Online Referral Services
Over the last 20 years, online legal referral services have mushroomed. Many of these websites also offer articles on different legal topics, including bankruptcy. Some of the more popular services are
These sites will provide a randomized list of attorneys who practice in your area. There is no cost to you for the referral list. Attorneys pay to have their names listed on the sites.
Local Bar Associations
Your local bar association will also have a referral service. If you call or inquire online, they will provide you free of charge with a list of members who practice the specialty you seek.
How Much Does It Cost to File Bankruptcy?
The subtext here is, “Should I choose an attorney by how much she charges?” Admittedly, this might be your primary concern. After all, you’ve probably been dealing with financial issues for some time and don’t have much left to spread around.
You’ll have three separate costs when you file a bankruptcy case.
- Court filing fee, including administrative fee: $338 for Chapter 7; $313 for Chapter 13
- Credit counseling fee: The pre-filing credit counseling session and post-filing financial management course are provided by independent organizations that charge a fee, usually $50, but can range anywhere between $25 and $100. Your attorney can usually give you the names of services available in your area and online.
- Attorney’s fee: The fee your attorney will charge is hard to classify and varies across the country. In my area, North Texas, attorneys charge a flat fee that about $2,000 to $2,500 for a Chapter 7 straight bankruptcy case and $3,500 for a Chapter 13 repayment plan case. Some attorneys charge a bit more when both spouses file one case, when there are lots of creditors, or when there’s business debt involved.