Attorneys’ Fees and Costs


One of the hardest things about filing bankruptcy is finding the right lawyer.  There are many lawyers who provide bankruptcy services in the Seattle area.  Sometimes it seems like the easiest thing to do is shop for a bankruptcy lawyer based on price.  Cost is a major consideration for someone in financial distress.

However, you will see that bankruptcy lawyers charge a range of fees.  It is hard to tell whether you are paying the right price.  You do not want to pay too much.  On the other hand, a cut rate attorney can actually make your financial situation worse and your life more stressful.

A bankruptcy is irrevocable.  You cannot voluntarily dismiss a chapter 7.  If a chapter 7 is involuntarily dismissed or a chapter 13 is voluntarily dismissed, you do not get the discharge, but it stays on your credit report for 10 years.

Once you understand why bankruptcy costs vary and how bankruptcy lawyers set their fees, you can make an informed decision about how much to pay for bankruptcy services and understand what to expect from your attorney.

Understanding Types of Fee

In Washington State, most bankruptcy attorneys will charge a flat fee that is “fully earned on receipt.”  That means that the fee becomes the immediate property of the firm and is not deposited into trust.  The fee agreement should specify what the flat fee covers and does not cover.  The fee agreement is required to tell you that even though a fee is fully earned on receipt, you are still entitled to a refund to the extent the fee was not reasonably earned.  Washington attorneys are prohibited from charging non-refundable fees.

The flat fee is often referred to as the upfront fee, because it is the fee that you are required to pay before the attorney will file the case.  Additionally, you are required to cover the costs of the case.  In a bankruptcy, you will give you attorney a deposit for the filing fee; because the attorney pays the filing fee on your behalf at the time the case is filed.  You are also required to pay the costs of the pre-petition credit counseling and post-petition debtors’ education typically $25 per course if don.  If you give the attorney a deposit for costs, that deposit must be deposited in the attorneys’ IOLTA trust account and must be refunded to you if it is not used.

Chapter 7 Bankruptcy Fees

Many people want to pay as little as possible for a chapter 7 attorney.  Attorneys’ fees can range from about $700 to $1,500, with complex cases costing more.  So how much should you pay?

Low Cost Chapter 7 Attorneys

A $700 – $1,000 attorney probably sounds tempting.  However, many of these attorneys are charging a lower fee for a reason:

  1. They are new attorneys trying to break into the market.  Some new attorneys are great – every lawyer was new once – but others don’t know what they are doing yet.  A lower priced attorney may be using your case to develop skills they don’t have yet.
  2. The attorney runs a volume practice.  A volume practice only works if the lawyer gives you minimal assistance.  Sure they will fill out your forms and show up at your 341 meeting for $700 – $1,000, but are they being careful enough?  An attorney has to spend enough time on a case to tell you if you have any areas of risk.  You do not want an attorney who misses an important issue, then tells you that it will cost even more to fix the problem.
  3. They aren’t a very good lawyer.  Filling out the petition is easy.  You don’t need a lawyer to fill out a form.  The hard part is identifying areas of risk, asking the right questions, and making sure the client is adequately informed about the risks and benefits of filing bankruptcy.  Some lawyers see bankruptcy as an easy way to make a quick fee.  Maybe it won’t be an issue.  But you do not want to hire lawyer who will miss an important issue, then abandon you.
  4. They won’t answer the phone or respond to emails.  You probably have a lot of questions about your bankruptcy.  When you hire me, you aren’t just hiring me to fill out the petition.  I answer questions, I respond to email, I call back, I’ll even schedule an extra meeting in my office just to make sure that you understand the bankruptcy process and are comfortable with it.  A cut rate attorney can’t provide that level of service.
  5. Watch out for attorneys who will let you pay them after your case is filed.  They may file your case, and then abandon you if you cannot keep paying.  Additionally, I have studied bankruptcy ethics and legal ethics; and it is my opinion that many of these fee arrangements are unethical or illegal.

How Much Should You Pay For A Chapter 7 Attorney

The typical bankruptcy attorney charges between $1,200 and $1,500 for an ordinary chapter 7 bankruptcy.  There are several factors that go into this fee:

  1. You get a real lawyer.  It’s that simple.  A real lawyer charges enough to take care of their clients.  My attorneys’ fee guarantees that I set aside enough time to take care of you, to answer your questions, and to do the best damn job possible.
  2. Once the petition is filled out, your attorney needs to analyze the case for areas of risk.  If any areas of risk are identified, then you attorney needs to be able to tell you how to reduce or eliminate the risk.  This takes time.
  3. For example, I have developed a bankruptcy intake and filing process that gets me the information I need to review the case for risks that creditors will contest the discharge, that the trustee will want to liquidate property, and how to protect property.  No lawyer can guarantee a result – that is prohibited by the Rules of Professional Conduct – a good lawyer can help you understand and avoid risk.
  4. I include counseling on reaffirmation agreements in my fees.  You do not have to reaffirm debts that are secured by real property; and, the court won’t approve those reaffirmation agreements.  I have the discretion to sign reaffirmation agreements.  If it is a reaffirmation agreement on a car and there is no undue hardship, I will sign the reaffirmation agreement.
  5. I include non-litigated follow up issues with the trustee and secured creditors in my fee.  This means that if something can be resolved without going to court, there is no additional charge.  Litigation (going to court) is rarely required to resolve most issues in a typical bankruptcy.  If I can resolve it with a couple of phone calls, some emails, or a letter, then there is no charge to you.
  6. I include discharge follow up letters in my fee.  Sometimes a creditor will contact you about a discharged debt.  I have a letter that makes them back off.  If they refuse to back off, then I will take them to court at no cost to you.

High Upfront Costs – Know Before You Pay

Anytime a chapter 7 bankruptcy costs more than $1,500 upfront, you should be sure that you understand why your case costs more than the typical $1,200 – $1,500 range for a chapter 7.  It is uncommon for me to have a chapter 7 case that costs more than $1,500 in upfront attorney’s fees.

  1. If you are self-employed or get paid significant commissions, your case requires much more preparation.  This is because I have to set up your case to protect your business’ assets.  Most businesses have assets that a chapter 7 trustee can liquidate.  For example, your equipment, your contracts, your commissions, and your accounts receivable are all treated as assets in bankruptcy that require protection.
  2. If your household gross income exceeds the WA State household median income by 50% or more, then I typically charge $1,800 for a chapter 7.  This is because these cases require more work before and after filing to qualify you for the chapter 7 discharge.  Most people do not fall into this category.
  3. If we know that there will be litigation, then the upfront cost may include the litigation costs.

$0.00 Upfront Attorney’s Fees

This is a common arrangement.  The client does not pay any attorneys’ upfront, just the filing fee and the cost of credit counseling.  This means that you have to file a chapter 13.  The court allows an attorney to receive a minimum of $3,500 for a chapter 13.  This means that you usually pay more for your bankruptcy than you would if you filed a chapter 7.

There are good reasons to file a chapter 13 bankruptcy.  Sometimes you do not have a choice.  A chapter 13 is appropriate if a creditor is taking immediate action and you have to file before you can save up to file a chapter 7.  Additionally, a chapter 13 bankruptcy can discharge certain debts that you cannot discharge in a chapter 7, allow you to take care of back taxes, or help you get your drivers’ license back.

There are also bad reasons to file a chapter 13 bankruptcy.  Some attorneys will rush clients into a chapter 13, because they can get a higher fee.  I won’t put a client into a chapter 13 bankruptcy without a good reason.

Chapter 7 Payment Plans and Additional Costs

I accept payment plans for chapter 7 cases.  I charge $100 to start your case.  Once you have paid $100, I will start the paperwork for your case and confirm representation to creditors who call.  Confirming representation to creditors does not prevent creditors from continuing collection actions such as lawsuits or repossessions, but it may cause some creditors to voluntarily slow down their collection actions.

The client is responsible for paying the attorney’s fees, making a deposit for the chapter 7 filing fee (currently $306), and completing the pre-petition credit counseling class.  The pre-petition credit counseling class typically costs $25 if done online.

Typically, a client will make the initial payment of $100 so that I can start the paperwork and confirm representation to their creditors.  Once I have received full payment of my fee, a deposit for the filing fee, and certificates of completion for the pre-petition counseling class, I can file the case.

The attorney’s fees cover all the services necessary to obtain a bankruptcy discharge.  This includes the analysis of your financial situation; preparation of the bankruptcy petition, schedules, statement of affairs, and means test; review of the petition for areas of risk or concern; filing the petition; representation at the 341 meeting of creditors; counseling on reaffirmation agreements; and any follow-up request with creditors or the trustee that do not require litigation.

We will discuss whether there will be any litigation in your case and whether it requires a response.  For example if you are surrendering your house, then it does not make sense to pay for me to respond to the mortgage company’s motion for relief from the automatic stay (i.e. permission to continue foreclosure).  Most people’s cases do not require them to pay any litigation costs.

Chapter 13 Attorneys’ Fees

Chapter 13 attorneys’ fees are set by the court.  Attorneys are paid $3,500 for what the Local Rules call pre-confirmation services.  Pre-confirmation services are those services that are ordinarily necessary for the confirmation of a chapter 13 plan.  In unusually complicated cases or cases that require additional services, the attorney may bill at their hourly rate.

I charge an upfront fee to cover my work before the case is filed, typically $500 to $1,200, with the rest of the fee being paid out of the plan payments.  Additionally, you are responsible for the chapter 13 filing fee (currently $281) and the costs of credit counseling and debtor education.

If the case involves services in addition to the pre-confirmation services – for example stripping off a second mortgage – those services are billed at the attorneys’ hourly rate.  These are either billed through the plan or they are the client’s responsibility to pay directly.

Most of my clients do not pay any more than the court’s pre-set $3,500 fee.