How do bankruptcy attorneys get paid?
In: Economics
There are different ways. Usually bankrupt people are still working and have some money. They may pay their bankruptcy attorney a fee instead of their credit card bills or some other creditor to get a bankruptcy filed. Sometimes they will skip a car payment or a mortgage or something else to pay their bankruptcy attorney.
Sometimes someone will lend or give them money (like a parent) so they can file bankruptcy. That’s generally how a chapter 7 bankruptcy is paid for. In a reorganization (Chapter 11), the bankruptcy results in a payment plan to creditors. Attorneys are paid from those plans, and so the attorney gets paid from money sent to the Trustee. Usually attorneys are paid before most other creditors. Attorneys will probably get some money up front as well, but it just depends on the attorney.
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