Eli5 How do bankruptcy attorneys make any money?
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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.
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