How Is Your Attorney Compensated When You File for Bankruptcy?

Interviewer: It sounds like it. Since most of the debts are wiped clean, if not all, during a bankruptcy proceeding, how do you get paid?

Vance: As far as Chapter 7 goes, they find the money. They either borrow it from a relative or they're working, and they're not paying their credit card debt anymore so they have a little bit of extra money to pay the legal fees.

In a Chapter 13 bankruptcy, most of the legal fees are paid off through the repayment plan. In a Chapter 13, you pay back some of your debt, so most of my legal fees are put into the plan, repaid off over the three to five year period that you're in the Chapter 13.

What Other Fees Are Associated with a Bankruptcy Filing?

Interviewer: What other fees are involved with a bankruptcy filing?

Vance: You have the filing fee. That's the fee we have to pay to the court to file the case. There are two sessions of debtor education that people have to go through. You have one that you can attend remotely. You do it over the phone or over the Internet, and it is a counseling session before I can file the case. You attend the second one after the case has been filed.

I have to run a credit report now, which for a joint one is about $78. There is an asset search I have to run just to do my due diligence, which is about $35. I do work with people as far as my legal fees ago. I have control over that.