Eli5 How do bankruptcy attorneys make any money?
In: 21
They get paid up front. That means that if you need to hire them you have to pay them a certain amount of cash first. Sell something.
I don’t know how it works if you have millions in assets and are going into bankruptcy. I expect they make you sell something or mortgage something and give them the money but, the lawyers may have written some loophole in the law where they have first claim on the assets before anybody else gets paid.
[removed]
Bankruptcy doesn’t mean you have no assets. Bankruptcy usually means that you don’t have enough assets to pay all your debts in full and on time, and you are asking for the legal system to help you mediate the issue.
The courts will make judgments on who gets paid how much and in what way, which heads off the inevitable lawsuits when people don’t get paid back as was agreed. This might mean that some debts get cancelled completely, but more often it involves the debts just being reduced or the repayment time being extended. Lawyers can be paid back under those circumstances because assets do exist.
Chapter 7 pay up front for most jurisdictions. Stop paying credit cards, save over time. Most have some funds to pay pay or get help from family. Chapters 12, 13 have a repayment plan to creditors. Some fees up front, most through plan. Chapter 11 usually corporations but can be individuals can be either.
Have to realise often creditors garnishing, threatening to foreclose or repossess. So an incentive to find funds to file. Many counsel volunteer services for those who truly cannot afford attorneys but need assistance.
They get paid upfront. I had to lend (gift) a few thousand to a family member so he could hire a lawyer to declare bankruptcy.
Like any other attorney, by being parasites.
Its very true in the case of bankruptcy ones too, they literally draw income from the corpses of dead businesses.
Latest Answers