Bankruptcy fees can be a hot topic. It can also get a bit complicated, so let’s start with the easy stuff first.
Most of the time, most lawyers charge a flat fee for doing a bankruptcy. This means that you are not paying by the hour and that you and the lawyer agree on a set amount of tasks for a set fee.
Cost of Chapter 13 Bankruptcy in Texas
The flat fee for a chapter 13 bankruptcy filing in our courts, called the Southern District of Texas, Houston Division is almost always $3500, plus the court filing fee of $281, for a total of $3781. This is what the court allows us to charge without having to go through a complicated process of asking the judge for permission to get paid for our time. Because of this court-created flat fee, most of the lawyers, including our firm, charge this fee for most chapter 13s. The amount of money you pay up front at our firm ranges from $300-$2,000 depending on the circumstances and facts of your case. Any of the fees that are left owing to our firm will be paid to us out the monthly payments that you make as part of your plan of reorganization.
On occasion, a chapter 13 may be so complex as to warrant being billed by the hour. In this instance, it is not possible to know how much the legal fees will be. Our paralegal rates are $75 an hour and our attorney rates range from $200 to $300 an hour.
Cost of Chapter 7 Bankruptcy in Texas
Chapter 7 bankruptcy fees can be more complicated and it’s not possible to know what we will charge until we have sat down with someone and learned all there is to know about their finances. Generally, our fees range from $2,000 to $3,000 for a chapter 7. That said, sometimes we charge far less or far more depending on your facts, but most fees fall within that range. When we quote a fee, we are also including all the associated fees for filing a chapter 7 which include a $307 court filing fee, a $49 credit counseling fee, a $19 financial management class fee (doubled for married couples) and a $30 credit report fee ($50 for married couples). So, when we charge $2500 for a chapter 7 for a married couple, we are actually getting paid, $2056 for our time.
It is normal to price shop. As a smart consumer, one should try to find the best value for one’s dollar. Our fees are probably a bit higher than most. In exchange for our slightly higher fee, you get extraordinary customer service, attention to detail, honesty, and a very high likelihood of success. We doubt that you would find any other firm that will answer your phone calls and emails within 24 hours and almost always the same day.
Hiring a lawyer is not all that different than hiring a doctor. You probably don’t want the cheapest and least experienced surgeon removing your gall bladder. Similarly, you don’t want a bankruptcy attorney who ignores your calls and emails and passes every single task to a non-lawyer assistant.
How to Select a Bankruptcy Attorney
Imagine you have 3 meetings with 3 bankruptcy attorneys and you tell each of them the same information. You get three different quotes for Chapter 7: $2800, $2600, $2000. As a consumer, it’s a no brainer to pick the one who quoted you $2000. I would nonetheless caution you to dig deeper. The $800 or $600 you saved represents a 30-40% change in fee, but what might you be giving up in value? What is the experience of the attorney charging $2,000? What are his or her office policies regarding customer service? What is his or her success rate? Did you get to meet with a lawyer or non-lawyer when you first went to the office? Did you feel comfortable?
Remember that when you hire a lawyer to do your chapter 7, you will be working with that lawyer and his or her office for 6 months to a year. Bankruptcy is a significant undertaking with many opportunities to make mistakes. Price is a consideration, but it needs to be weighed against many other factors that relate to one of the most important reasons you are filing chapter 7 bankruptcy: to wipe out a bunch of debt and get a fresh start. Don’t just pick the cheapest, pick the best as it relates to all the things you must consider.