Why is bankruptcy so expensive?

Bankruptcy Attorney’s Fees are Expensive! Or are they?

This is really three questions: Is bankruptcy expensive?  If so, why is that? And, why is it SO DANG expensive? The attorney’s fee for a routine Chapter 7 case ranges (depending on the details of the case and where you live) from a low of around $700 to well over $3,000 – clearly more than one routinely spends for typical goods or services.  Why is the cost of bankruptcy so high?

In response to my quoting a fee, I often hear a variation on, “If I had THAT much, why would I file bankruptcy?!” This is as much a visceral reaction to the need to come up with the attorney’s fee as it is a serious question about the cost, since most potential bankruptcy debtors owe many thousands of dollars, and would gladly settle all of their debt for an amount equal to (and usually more than) the quoted attorney’s fee and court costs.

Outside of bankruptcy court, there is little to no chance that creditors are going to be legally satisfied with pennies on the dollar, despite the claims of debt settlement scammers to the contrary. So, if you are really going to get actual relief from your debts (AND, you really are in a position where it would, all things considered, be either impossible or, at least, foolish to try to do so), bankruptcy is the only real option.

Successfully preparing and completing even a “routine” bankruptcy case requires extensive knowledge of the federal bankruptcy laws, local state laws and rules, and local bankruptcy court procedures and practice.  There is simply too much risk involved in not knowing how all of these factors apply to a given case to not hire an expert (in the form of an experienced bankruptcy attorney) to advise and counsel in the case.  Any bankruptcy attorney can provide many horror stories having watched as the bankruptcy trustee has taken thousands of dollars or even paid-for cars and homes from those who decided to file without an attorney.

So, is bankruptcy expensive?  Given the risk/reward ratio involved, I don’t think so.  If it is, though, that’s because it takes a real expert professional to do it right.  And, yes, I will confess that candy bars that cost more than about a dime seem expensive to me, even DANG expensive.  But, as always, you get what you pay for.

Mark Emmett, Utah Bankruptcy Attorney