With a few happy exceptions, plenty! It’s not a stretch to generalize that if you need an attorney to help you with your foreclosure, you will have difficulty raising the money to pay for it.
Chapter 13 Bankruptcies
Chapter 13 attorneys commonly charge $3,000 to $4,000 per case, depending on the attorney and where you live. If your case appears unusually complex from the beginning, the fee you are quoted may run even higher. If the fees are below a certain amount set by each court (called no-look fees), the court won’t examine them; above that amount and the attorney will have to convince the court that they are justified.
If you can come up with a portion of these fees up front, the rest of the fee can be paid over time through your Chapter 13 plan. How large a portion up front? In routine cases, roughly $1,500 and up.
Chapter 7 Bankruptcies
Attorney fees for a routine Chapter 7 bankruptcy case run from $1,200 to $2,000, depending on the lawyer and the locality. Most attorneys require you to pay the full fee before you file the bankruptcy, because bankruptcy legally discharges, or cancels, whatever fees are unpaid as of the filing date.
Lawyers can get permission from the court to charge you for work done after you file, but they would rather not be your creditor after they have worked to get you out of debt. So their up-front charges take into account the work they might have to do after you file.
Fighting a Foreclosure in Court
If you want to fight a foreclosure in a judicial foreclosure proceeding or in a separate court action in a nonjudicial foreclosure proceeding, plan on paying an up-front retainer of several thousand dollars, whether you use a bankruptcy or a real estate attorney.
One way to get help from a lawyer—and pay less—is to pay only for specific tasks. Some lawyers will agree to perform certain limited tasks for you instead of taking responsibility for the whole matter. This is called offering unbundled services. For example, if you file for bankruptcy without a lawyer’s help, and then your lender asks the court to let it proceed with a foreclosure, you might be able to hire a lawyer just to oppose the lender’s request.
The fee will vary depending on the complexity of the task and the lawyer’s enthusiasm for providing unbundled services. An attorney might charge only a few hundred dollars to help you negotiate with your lender. And if you want an attorney to represent you in a judicial foreclosure case where you have no serious challenge to the foreclosure but just want to delay the inevitable, the fee will likely be hundreds of dollars instead of thousands.
As a general rule, you should hire an attorney for an unbundled service whenever the amount of the dispute justifies the fee. If a creditor objects to the discharge of a $500 debt, and it will cost you $400 to hire an attorney, you may be better off trying to handle the matter yourself, even though this increases the risk that the creditor will win. But if the dispute is worth $1,000 and the attorney will cost you $400, hiring the attorney makes better sense.
Unfortunately, many bankruptcy attorneys do not like to work on a piecemeal basis. They worry that by doing a little work for you, they might be on the hook if something goes wrong in another part of your case—that is, if they are in for a penny, they are in for a pound. Also, the bar associations of many states discourage lawyers from providing unbundled services. On the other hand, some state bar associations are encouraging attorneys to offer unbundled services simply because so many people can’t afford full representation.
You May Be Able to Afford a Lawyer if You’re Not Paying Your Mortgage
A lawyer can often be retained for the equivalent of one or two mortgage payments. Because a lawyer may help you delay your foreclosure for a number of months, during which you can live in your home payment free, hiring a lawyer can be very cost effective.
Excerpted from The Foreclosure Survival Guide, by Stephen Elias (Nolo).