4 tips for finding the right bankruptcy attorney for you

Not all bankruptcy attorneys are created equal. That’s not shocking: After all, the same could be said about finding help in any profession that requires expertise and training. But there are some things I would encourage you to look out for when you’re interviewing a bankruptcy attorney.

Editor’s note: A version of this article originally appeared on the Consumer Recovery Network website, titled “How to find and interview the bankruptcy attorney you will hire.”

Having worked with people to resolve problem debt by choosing bankruptcy alternatives for more than 20 years, I’ve referred more people to attorneys than to my main debt relief niche of debt settlement. That’s not just because you should look at the pros and cons of bankruptcy as part of any due diligence into how to solve your debt problems. It’s also because debt settlement usually can’t compete with Chapter 7 bankruptcy for speed and overall cost for most people who want to resolve their debt. In this article, I’m mainly focused on Chapter 7 (which is the total discharge of your debt), although the same best practices apply for those who wish to file for Chapter 13 bankruptcy (a reduction and reorganization of debt), as well.

> Related article: What are the differences between debt relief & bankruptcy?

Just because an attorney has a dedicated practice in the area of consumer law (that’s the category that Chapter 7 and Chapter 13 bankruptcy fall under), doesn’t mean they’re good at it or that they’re going to help you understand how to make the best of what’s likely a bad situation. Here are four things you can immediately look for when consulting with bankruptcy attorneys, paralegals, and paraprofessionals offering debt relief assistance through bankruptcy

1. Pay attention to the questions the bankruptcy attorney asks.

Are all of the questions you are being asked (yes, there will be many questions!) dedicated to numbers and figures? Details about your income and expenses are necessary, of course. The attorney needs this information in order to present you with your options. But I find bankruptcy professionals are overly focused on this aspect of the process. I encourage people to listen for certain questions the attorney or other debt relief professionals should be asking. These questions can include:

• “Do you or any of your children plan on applying for student loans in the next three years?”
  Bankruptcy can impact individual and Parent PLUS or direct loans.
• “Do you plan on staying in the home you barely have any equity in, or may be upside down on, and if so, for how long?”
  If you can’t keep up with your mortgage payments and you are not in a great equity position, it can make sense to plan that out with your eventual bankruptcy filing in mind so that you can seek relief from real estate-related debts through the bankruptcy process.
• “Are you experiencing any immediate medical issues, or do you have any immediate medical needs?”
  If your health is not stable at the time of filing bankruptcy, it can often be better to delay your filing until you are more stable. There are times when financial stress can cause or aggravate existing health concerns.
• “Is Chapter 7 going to cause you to liquidate nonexempt items that could be sold and the cash used to settle debts for less than what you owe?”
  It’s entirely possible to avoid bankruptcy by negotiating lower payoffs with unsecured creditors. On the other hand, it’s also silly for many people to use debt settlement as a way to avoid Chapter 7 bankruptcy, both from a cost and lost-time basis, and even from a psychological one. But it troubles me how many reports I get from consumers about how the bankruptcy attorney they consulted with never touched on the possibility of settling bills to avoid filing Chapter 7, and especially as a way to keep out of Chapter 13 repayment plans that are often inflexible and hard to complete.

> Related article: 7 questions to ask before filing for bankruptcy

Why these questions matter

Unless you’re pulling into bankruptcy court with a financial tank full of fumes (you’re out of money each month before you’re out of bills to pay), all the above questions should be assessed by bankruptcy professionals. Your answers to those questions, and several others, may still have you filing Chapter 7 bankruptcy, but perhaps on a six- or 12-month delay — maybe even longer.

2. Don’t let the bankruptcy attorney rush or pressure you.

For many people, finally reaching the decision to simply talk with a bankruptcy attorney is exhausting. As you go about gathering information about the process, don’t be tempted to rush headlong into filing if you don’t need to right away. Slow down enough to not only make sure you’re making the right choice, but that you’re also maximizing the benefits that Chapter 7 bankruptcy brings to what has already been a very difficult journey. And along that same line of thought, don’t allow yourself to be rushed into filing bankruptcy by a bankruptcy attorney.

You may need legal relief from a wage garnishment, lien, levy, or to prevent a loss of property.  Bankruptcy can indeed provide immediate relief from creditors, but unless you are in some type of financial emergency, you likely have time to consider why and when it’s best for you to hire the bankruptcy attorney and proceed.

3. Shop around and take advantage of free consultations.

Remember: There’s so much more to learn about bankruptcy beyond taking the first step to call or walk into an attorney’s office. Don’t take for granted that what you read about filing bankruptcy online is a) accurate or b) all the information you need. There are state-specific considerations in bankruptcy and a host of individualized things about your situation that need to be discussed with bankruptcy professionals. 

Calling to consult with an attorney or a member of their staff doesn’t mean you’re actually filing for bankruptcy. It simply means you’re gathering all the information you need. Those consultations are confidential, and many are offered at no cost. 

You can and should shop around for the bankruptcy attorney you want to hire. Just because you talked to one a month ago and got some helpful information, you’re under no obligation to hire that person or firm. If something about them rubbed you the wrong way, if they weren’t personable, or if they didn’t ask many of the questions I outlined above, I would suggest calling someone else.

No-cost bankruptcy consultations are common; they’re also typically brief. Be sure to call back with additional questions that are likely to come up.

4. Don’t worry too much about price comparisons.

When you’re hiring an attorney for reasons other than bankruptcy, fees can be all over the place. When it comes to Chapter 7 bankruptcy attorneys, however, the fees tend to be within a few hundred dollars of each other, and are often more related to where you live (residents of coastal cities tend to pay higher Chapter 7 attorney fees than those of us living inland).

There are two reasons why attorney fees for Chapter 7 bankruptcy stay fairly consistent:

• If your filing doesn’t involve many assets, your case will likely be pretty straightforward. In other words, there won’t be a notable amount of “lawyering” that will be necessary.
• Bankruptcy judges and trustees would be alerted to inflated Chapter 7 fees. And because court fees and costs are uniform, there isn’t much to elevate your average Chapter 7 total costs anywhere above $2,000. In other words, the court system keeps bankruptcy lawyers from price-gouging people filing no-asset and uncomplicated Chapter 7s.

There are some exceptions that could require an attorney to incur more than the average amount of hours, such as attempting to discharge student loans, someone having multiple asset interests, and other things that can put a kink in a straightforward Chapter 7 bankruptcy. But those aren’t the norm. 

For these reasons, fees are not generally a part of what I suggest you use as a comparison for the bankruptcy attorney you ultimately hire. 

Some attorneys will accept monthly payment plans when you file a Chapter 7. Some may not file your bankruptcy petition until you’ve paid their fee and covered courts costs and filing fees, but you can often get relief from debt collector calls once you retain your attorney.

In addition, there are some low-income legal aid offices that provide discounted bankruptcy services to those who qualify.

A final word about bankruptcy and credit scores

Just because you can squeak by making payments on your debts each month doesn’t mean you aren’t a perfect candidate for bankruptcy and a fresh start with your finances. I find people in this category to be some of the best candidates for Chapter 7.

If you aren’t being asked personal life and financial outlook types of questions by bankruptcy professionals you speak with (like those I covered above), I would question whether or not they’re going to be looking out for your best interests.

Don’t let debt-relief professionals of any type skew your perception of how to resolve problem debts with talking points about how your credit scores can be hurt and the damage to your credit reports that can ensue. There’s a ton of misinformation out there about how Chapter 7 bankruptcy kills your credit or cuts off access to financing. It doesn’t, at least not to the level you may be concerned about.

> Related article: 6 steps to rebuild your credit after bankruptcy