Michigan Bankruptcy Lawyer

I saw this question posted on an online discussion board, and, possibly because it was rather blunt, it had gone unanswered for several days. Personally, I thought it was a good, basic question that deserved an honest answer. I have known many people in my life who have half-seriously “joked” that they would file for bankruptcy “if only they could afford it.” It is a question that many people have, and it is worth discussing.

Most attorneys in my area of southeastern Michigan are currently charging approximately $1000 to file a basic Chapter 7 bankruptcy petition. Depending on the geographic and the attorney, this might or might not include the Court’s filing fees. And, although I have seen a few attorneys and, especially, non-attorney “bankruptcy petition preparers” charging less than this in my area, this is generally also a starting-point price rather than a ceiling. It can rise with the level of complexity, in other words. Some attorneys—although not myself—charge much more than this as a starting-point.

The filing fees for a Chapter 7 bankruptcy filing are currently $299. Debtors may file pro se (file the petition themselves, without an attorney’s assistance or representation, that is), paying only these filing-fees and avoiding anywhere from $700-$1000 (or more) in attorney fees, but, unless the property of such debtors is very limited, they run the risk of misunderstanding the available exemptions and other complexities of the bankruptcy process and missing out on utilizing the process to its best effect. In any case, even without an attorney’s assistance, a Chapter 7 still costs roughly $300.

Most people who have a certain amount of property that they wish to protect do wish to take advantage of the expertise of a bankruptcy attorney, however, and, at that point, the question remains: why does that expertise cost so much?

The pat answer is the same that any service-provider in any industry, from automotive to medical and onward, would give: “I charge $X per hour, and the work will take X hours.” In the case of an attorney, that is certainly true. Attorneys in Michigan charge in hourly rates anywhere from around $150/hour upward, depending on experience and the legal areas they specialize in. The “flat fees” that attorneys charge for something like a Chapter 7 bankruptcy filing do approximate an attorney’s hourly rate billed for the approximate number of hours it usually takes to meet with the client several times, collect their information and paperwork, and prepare the exceedingly lengthy bankruptcy petition and attached schedules and other documents. And that paperwork, since the 2005 BAPCPA (“Bankruptcy Abuse Prevention and Consumer Protection Act”), has grown much more complex and, therefore, more time-consuming and with more legal obligations for the attorney and, thus, more expensive for the debtor.

But the real answer, I maintain, is not that attorneys simply deserve an hourly rate that boggles the minds of most working-people. Rather, the answer is that, whatever an attorney is charging for a Chapter 7, it is a small price to pay for the value you receive. For a mere $1000 + filing-fees, you can save a $200,000 home from foreclosure, stop night-and-day collection call harassment, and eliminate many thousands of dollars’ worth of credit-card debt. Making all of this happen properly is hard work for the attorney filing the petition, but the real reason a Chapter 7—or any legal service—costs what it does is that that is what the end-result is worth.

If you have any questions about Chapter 7 or Chapter 13 bankruptcy or any other legal matter, please contact me to schedule a free consultation.