How much does Bankruptcy Cost

At least once per month I get a phone call that goes something like this: I filed a chapter 13 bankruptcy case with “XYZ attorney” last year and now I need to file a Motion to Incur Debt (for example) since I need to get a new car loan, but the problem is that I just cannot get a hold of anyone at his office. I have left repeated messages and emails, but no one will call me back. So, can you help me?

I then go on to explain that in order for me to help them they would need to fire their current bankruptcy attorney –talk about awkward- and retain me. Mind you, retaining me at this point will not be cheap since right of the bat I will have to file a motion with the court and attend a hearing and get the judge’s permission to enter the case. Suffice to say, the potential client is anything but thrilled upon hearing this. In fact, most feel stuck at this point. You want to “break up” with your current bankruptcy attorney, but are finding it very hard to do so. Ouch!

The fact of the matter is that a chapter 7 bankruptcy filing is over and done with in about 100 days from the time your file. By contrast, a chapter 13 bankruptcy filing typically last anywhere from three years to five years. Moreover, a chapter 7 bankruptcy filing usually does not involve too much work after the creditors hearing takes place, which is about one month after filing. Not so with a chapter 13 bankruptcy. The “real fun” usually begins after the creditors hearing as you try to ensure that your case gets confirmed. And while the confirmation of your chapter 13 Plan pretty much signifies that “the fat lady has sung,” the fact of the matter is that there are all kinds of issues that can and typically do pop up after your case is confirmed. Here are some common illustrations:

• There are issues with the proof of claims. You filed a 100% plan for instance, but lucky for you not all creditors filed timely claims.
• Your car that was part of the bankruptcy filing just got totaled.
• Unfortunately you lost your job and are wondering how that impacts your bankruptcy case.
• You suffered a short term set back and would like to see if you there is any way to suspend your payments to the trustee for a few months.
• Bank has just filed a Motion for Relief from the Automatic Stay because you have not kept up with your mortgage payments since the filing of your case.
• The chapter 13 trustee is demanding your tax refund from last year, but you have already spent it.
• You lost your part time job that you had at the time of the filing of your case and are wondering if your payments to the bankruptcy trustee can be reduced.
• You need a new car loan and realize that you need the court’s permission before you get a new loan.

So what’s the point of all of this? When selecting a bankruptcy lawyer, particularly in the context of a chapter 13 case, understand that he or she is going to be your attorney for many years to come. Understand that issues will come up during the next 3/5 years and that you will need to have access to your bankruptcy lawyer and you will need his help. Understand that while “how much does it cost” is a legitimate concern, the more important thing to ask yourself is “how much will I be getting in return?”

Oh, and in case you are still wondering, most bankruptcy attorneys in this area charge $3,000.00 for a chapter 13 bankruptcy case. For an excellent article on the “how much does it cost” issue revolving bankruptcy filing, please see what Charleston bankruptcy lawyer Russell A. DeMott had to say in his blog article titled Bankruptcy Lawyer’s Fees: “How Much Is it?”