Bankruptcy attorneys help individuals and businesses eliminate or restructure debt through federal court proceedings. This guide covers Chapter 7 vs Chapter 13 bankruptcy, lawyer costs, qualification requirements, and how to find the right attorney.
Bankruptcy Quick Facts 2025
- Chapter 7 cost: $1,500 - $3,500 (attorney fees + $338 filing fee)
- Chapter 13 cost: $3,000 - $6,000 (attorney fees + $313 filing fee)
- Chapter 7 duration: 3-6 months
- Chapter 13 duration: 3-5 years repayment plan
- Credit impact: 7-10 years on credit report
Chapter 7 vs Chapter 13 Bankruptcy
| Factor | Chapter 7 | Chapter 13 |
|---|---|---|
| Also Known As | Liquidation bankruptcy | Wage earner's plan |
| Duration | 3-6 months | 3-5 years |
| Income Test | Must pass means test | Regular income required |
| Assets | Non-exempt sold to pay debts | Keep all assets |
| Home Foreclosure | Cannot stop | Can stop and catch up |
| Debt Repayment | None (debts discharged) | Partial repayment plan |
| Credit Report | 10 years | 7 years |
| Best For | Low income, few assets | Higher income, save home |
Bankruptcy Types Explained
MOST COMMON
Chapter 7 Bankruptcy
- What it does: Eliminates most unsecured debts entirely
- Debts discharged: Credit cards, medical bills, personal loans
- Debts NOT discharged: Student loans, child support, taxes, secured debts
- Means test: Income must be below state median or pass expense test
- Assets: Non-exempt assets sold (most people keep everything)
- Timeline: Complete in 3-6 months
REPAYMENT PLAN
Chapter 13 Bankruptcy
- What it does: Restructures debt into 3-5 year payment plan
- Key benefit: Keep all assets, catch up on mortgage/car
- Requirements: Regular income, unsecured debt under $465,275
- Payment amount: Based on disposable income
- Secured debts: Mortgage and car payments continue
- Completion: Remaining unsecured debt discharged after plan
Bankruptcy Lawyer Costs 2025
| Cost Component | Chapter 7 | Chapter 13 |
|---|---|---|
| Court Filing Fee | $338 | $313 |
| Attorney Fees (Average) | $1,500 - $3,500 | $3,000 - $6,000 |
| Credit Counseling Course | $25 - $50 | $25 - $50 |
| Debtor Education Course | $25 - $50 | $25 - $50 |
| Total Typical Cost | $1,900 - $4,000 | $3,400 - $6,500 |
Factors Affecting Attorney Fees
- Location: Urban areas typically cost more
- Case complexity: Business assets, lawsuits increase cost
- Attorney experience: Specialists may charge more
- Asset review: More assets = more work
- Creditor negotiations: Contested debts add time
Qualifying for Bankruptcy
Chapter 7 Means Test
- Income comparison: Below state median = automatic qualification
- Expense calculation: If above median, calculate allowed expenses
- Disposable income: If less than $8,175 over 5 years = qualify
- Prior bankruptcy: No Chapter 7 in past 8 years
Chapter 13 Requirements
- Regular income: Wages, self-employment, benefits
- Debt limits: Under $465,275 unsecured, $1,395,875 secured
- Tax returns: Filed for past 4 years
- Prior bankruptcy: No Chapter 13 in past 2 years, no Chapter 7 in past 4 years
What to Expect in Bankruptcy Process
- Consultation: Meet with attorney, review finances
- Credit counseling: Required course before filing
- Document gathering: Tax returns, pay stubs, asset list
- Petition filing: Attorney files with bankruptcy court
- Automatic stay: Creditors must stop collection
- 341 Meeting: Meeting with trustee and creditors
- Debtor education: Second required course
- Discharge: Debts eliminated (Chapter 7) or plan completed (Chapter 13)
Debts That Cannot Be Discharged
- Student loans: Except in rare hardship cases
- Child support: All arrears and future payments
- Alimony: Spousal support obligations
- Recent taxes: Income taxes less than 3 years old
- Fraud debts: Debts from fraudulent activity
- DUI damages: Personal injury from drunk driving
- Criminal fines: Court-ordered penalties
How to Find a Bankruptcy Attorney
- Get referrals: State bar association, legal aid
- Check credentials: Licensed, no disciplinary actions
- Read reviews: Google, Avvo, Better Business Bureau
- Free consultation: Most bankruptcy lawyers offer free initial meeting
- Compare fees: Get quotes from 2-3 attorneys
- Ask questions: Experience, timeline, communication
- Payment plans: Many offer installment payments
Alternatives to Bankruptcy
| Alternative | Best For | Considerations |
|---|---|---|
| Debt Consolidation | Good credit, multiple debts | Still owe full amount |
| Debt Settlement | Lump sum available | Tax on forgiven debt |
| Credit Counseling | Minor debt issues | Takes 3-5 years |
| Negotiate with Creditors | Temporary hardship | May not succeed |
| Do Nothing | Judgment-proof | Debt remains |
FAQ
Will I lose my house in bankruptcy?
In Chapter 7, you may keep your home if equity is within state exemption limits. In Chapter 13, you can keep your home and catch up on missed payments through the repayment plan.
Can I file bankruptcy without a lawyer?
Yes, but it's not recommended. Bankruptcy has complex rules, and mistakes can result in dismissal, loss of assets, or debts not being discharged.
How soon can I get credit after bankruptcy?
You can start rebuilding immediately with secured credit cards. Many people qualify for car loans within 1-2 years and mortgages within 2-4 years.