How do bankruptcy attorneys get paid?

Question

How do bankruptcy attorneys get paid?

In: Economics

Answer 1

They get a portion of the bankruptcy estate. People who go bankrupt typically don’t have $0 in property. They might have equity in a home, or a vehicle, or other personal property. Chapter 7 rounds all that value up into the bankruptcy estate (minus exemptions which vary by state) and creditors get paid from that. The attorney’s fee is one of the first to get paid. Secured creditors are typically paid or get their property back. Unsecured creditors typically get nothing or pennies on the dollar.