When you’re flat broke and thinking about bankruptcy, cheaper sure looks better.
If a lawyer will do your Chapter 7 for $600, what’s the point of paying $1000? Or even $2000?
Like answers to many legal questions, it depends.
Bankruptcy relief depends on your facts
Whether to file bankruptcy, or whether to file now, rather than later, depends on how the facts of your financial situation interact with bankruptcy law.
Your bankruptcy lawyer is charged with gathering those facts and analyzing them so that you get the most debt relief the system can offer.
If your bankruptcy lawyer doesn’t dig deep enough, or think broadly enough, you may hit avoidable snags in your case.
With the caveat that there is no direct and sure-fire connection between cost and quality, let’s talk about what it costs to escape from broke.
How to figure what you should pay
1. The cheapest guy in town isn’t for you. Chances are, he’s new to the field. He’s dabbling. He’s hoping to sell you something else along with a bankruptcy, or he’s outsourced the real work to someone with less training than he has.
Further, if you are looking for advice about finances, is the cut rate practitioner the one best suited to provide that perspective?
2. The more that’s at stake, the better representation you need.
The larger the value of your assets, the more likely you need higher value legal help. If the point of the bankruptcy is to save your house or end nasty big dollar litigation, you need more legal firepower than if you are simply discharging old credit cards or medical bills.
3. The more people involved with you in money matters, the better lawyer you need
Got business partners, assets owned with others, money set aside for children? All of those situations trigger special parts of the bankruptcy code with possible results you or an inexperienced lawyer don’t anticipate.
4. Who is chasing you?
When your likely opponents in a bankruptcy case are heavy weights, you need to lawyer up. Think IRS, criminal justice system, or well funded ex spouses.
The stronger your opposition, the more likely weaknesses in your bankruptcy case will be identified and exploited, to your detriment.
What legal fees should buy
When you hire a bankruptcy lawyer, you are buying familiarity with the body of bankruptcy law and the analytic skills to see how that law applies to the facts in your case.
The more you pay, the greater your entitlement to some hand holding in the form of answers to your questions, no matter how muddled or how frequent.
Price is not necessarily connected to good client service, but that is usually the case. Low fees leave little room for interpersonal niceties or actual access to the lawyer.
How much to pay for bankruptcy
At the risk of falling back on cliches, it depends.
It depends on the cost of living where you are. Legal fees are more expensive in San Francisco than they are in Redding or Susanville.
It depends on your situation. Straightforward kind of debts, stand-alone finances, and few assets, the more likely the mid price practitioner can handle your case well.
It depends on the level of service you want and need to get through a tough patch. If you are emotionally battered, unsure, or unwell, maybe you want to pay for more service rather than less.
Survey the legal market where you are. Be prepared to interview and reject lawyers and law firms who can’t talk candidly about their experience, fees and costs.
And don’t think that a high fee necessarily means expert representation.
After all, it depends.
- The only three reasons that bankruptcy makes sense
- Questions you should ask a prospective bankruptcy lawyer
- Why I don’t do free consultations
Image courtesy of Flickr & Ryan Dickey