If you find yourself needing to file for bankruptcy, you’ll need an advocate to guide you through this complex process. This is where a bankruptcy lawyer comes in. Filing for bankruptcy is a way for individuals to obtain protection from creditors and can provide relief from some or all of a person’s debt obligations.
Chapter 7 vs. Chapter 13: What’s the difference?
There are two main types of bankruptcy filings: Chapter 7 and Chapter 13. Chapter 7 involves the discharge of most unsecured debts such as credit cards, medical debt and personal loans by the court. Debt such as student loans, alimony and child support as well as tax debt will not be discharged under Chapter 7. This type of filing is often called a “second chance” as it can provide relief from these unsecured debts providing an opportunity to restructure your financial situation.
Chapter 13 generally involves a reorganization of your debts in a fashion that will allow you to repay them and get current. There is generally a 3-5 year time limit on the reorganized payments and debtors can usually work it out to keep their primary residence.
In either case, the rules can be very complex, there are deadlines to file documents and make arguments on your behalf and there are often one or more court appearances involved. For most people filing for bankruptcy, hiring a bankruptcy lawyer is well worth the cost.
What does a bankruptcy lawyer do?
A bankruptcy lawyer is an advocate for their client during the bankruptcy process.
A qualified and experienced bankruptcy attorney helps protect their client’s assets from creditors and helps free their clients from debt obligations to the extent possible. In short, a bankruptcy lawyer advocates for their client to obtain the best possible outcome for them in the bankruptcy process.
A good bankruptcy attorney will do several things on behalf of their client. Most of all, a good bankruptcy lawyer will use their experience and expertise to guide their client through this complex and often stressful process. Each client is an individual and each bankruptcy filing is unique based on the client’s unique situation. A bankruptcy attorney should recognize this and treat each case as unique.
Studies have shown that the success rate for those filing for both Chapter 7 or Chapter 13 bankruptcy is much higher when represented by an attorney than when doing it themselves.
What to expect from a bankruptcy lawyer
Your expectation from a bankruptcy lawyer is that they have a thorough understanding of the bankruptcy rules, regulations and laws. Whether your case is complex or relatively simple, you want to be sure that the attorney you choose has the experience and expertise to file the correct form of bankruptcy on your behalf.
First, you should expect sound, personalized legal advice from your bankruptcy lawyer. We’ve all seen ads on TV for bankruptcy attorneys. While some of these lawyers are likely very good, others may be more focused on volume rather than delivering quality advice. When searching for a bankruptcy lawyer do your best to find an attorney who takes a personalized approach to each client’s case.
You should also expect meticulous attention to detail. Bankruptcy proceedings entail a lot of details and filing deadlines. In some cases missing a deadline for filing a form or submitting information on your behalf can jeopardize your case. You want to be sure your bankruptcy attorney understands these deadlines and has the mechanisms in place, including support staff, to enable them to be timely and accurate on your behalf. Your bankruptcy attorney should prepare all of the paperwork and forms connected with your case.
You should expect your attorney to advise as to the right form of bankruptcy to file based on the specifics of your situation. Each case is different and your attorney’s expertise should be used to guide you down the best path for our situation. You should expect your attorney to communicate with you about the progress of your case and to communicate in a timely fashion when something is needed from you and to provide regular updates.
When should you get a bankruptcy lawyer?
Based on statistics regarding the success rate, defined as receiving a discharge of their debts in bankruptcy, those looking to file for either Chapter 7 or Chapter 13 bankruptcy are well-advised to obtain the services of a competent bankruptcy lawyer early on in the process.
Creditors who are looking for judgments to compel you to pay your debts to the creditor have lawyers who are ready to file for a judgment in court. If you are not well versed in the law, especially in bankruptcy law, it is like stepping up to bat in a baseball game with two strikes against you. The odds of a successful outcome are just not in your favor.
Bankruptcy laws are complex. There are a lot of filing requirements, and missing a deadline or providing incorrect information can have severe consequences. The bankruptcy trustee could rule against you and liquidate your assets as a result. This might include selling your home or other assets to cover some of the disputed debts.
Even if you get all of the necessary forms done, filed correctly and on time there is still the issue of arguing your case in court in front of a judge. Are you comfortable doing this? Do you have the requisite understanding of the relevant bankruptcy laws? Do you have the time and knowledge to prepare your case?
There can be a lot at stake in a bankruptcy case. Even with the best outcome bankruptcy is generally a financial setback. Doing it yourself instead of hiring a knowledgeable bankruptcy lawyer can lead to an outcome that is even more financially devastating to you and your family.
How to find a bankruptcy attorney
There are a number of directories that list attorneys by location and specialty. As with many professional directories, many of these listings require attorneys to pay to be listed. The listing service may or may not verify anything about the attorney.
Two good online sources to consider as a starting point are:
- The American Bar Association offers resources to find lawyers in many states. You can use ABA site resources to determine if an attorney is licensed in your state. The New Jersey Bar Association offers a lawyer referral service on a county by county basis.
- The National Association of Consumer Bankruptcy Attorneys is an organization dedicated to helping consumers going through the bankruptcy process. Membership is limited to bankruptcy attorneys who meet the organization’s membership criteria. However, the organization’s site has a disclaimer saying that they do make any representation with regard to the attorneys listed.
Another source can be friends, relatives or professional associates if you are comfortable asking them for a referral. This might be touchy if these friends, relatives or associates are not aware of your situation or if you don’t want them to know. You may be forced to weigh your privacy concerns against the risks of going with a subpar bankruptcy lawyer.
How much does a bankruptcy lawyer cost?
Fees for a bankruptcy filing will vary from lawyer to lawyer and based on whether you are filing Chapter 7 or Chapter 13. Attorney fees for Chapter 13 will be higher as this is a more complex process.
Nationally, attorney fees for a Chapter 7 filing might range from $1,500 to $3,000. For Chapter 13 filings, the fee range is generally $3,000 to $4,000. These are all-in fee ranges, with the bulk of the costs being for the attorney.
In New Jersey, the cost of a bankruptcy attorney for Chapter 7 ranges from $1,000 to $2,800. Chapter 13 costs can range up to $4,500 or more. However, these are just estimates. No matter what type of bankruptcy you choose, costs can vary widely based on your location and other factors.
There will also be filing fees in the $300 to $350 range depending upon the type of bankruptcy filing. There may be other fees depending upon the specifics of your case and fees that might be location specific.
When looking at the cost of a bankruptcy lawyer you need to weigh this cost against the cost of a negative outcome that can be more likely if you choose to represent yourself, especially if you lack the knowledge needed to represent yourself. You also want to weigh the cost of a “bargain” lawyer versus bankruptcy lawyer who is knowledgeable and who will take the time to represent your interests to the fullest extent possible.
This story was written by NJ Personal Finance, a partner of NJ.com. The information presented here is created independently from the NJ.com editorial staff, and purchases made through links in this article may result in NJ.com earning a commission.
