Anybody who is being sued for a debt is contemplating bankruptcy, or is being harassed by a creditor is likely to be concerned about the cost of hiring a lawyer. Understanding the potential costs of hiring a lawyer in advance is vital for you to decide whether hiring one is worth your time and money.
Generally, there are four ways in which a lawyer can charge a client:
An attorney's billing is typically done on an hourly basis. The problem, however, is that anyone who has worked with an hourly lawyer has experienced how quickly legal bills can pile up.
Due to the fact that debt collection lawsuits usually involve only a few thousand dollars, in the event that a consumer has to pay the lawyer by the hour, they can easily end up paying the lawyer more than the debt collection company was trying to recover. Therefore, flat fees are better in debt defense cases. A flat fee structure allows the clients to predict how much they will have to pay ahead of time and avoid sticker shock when the bill arrives.
The flat fee arrangement has become a popular billing method in debt collection defense cases for a number of reasons. However, rather than charging a single upfront flat fee, dividing the fee into smaller portions at various stages of the case prevents windfall.
As an example, if you hired a lawyer on Monday, paying them a full flat fee, after which your case was settled the next day, you shouldn't be obligated to pay that full fee. Rather, flat fees are scheduled at various points in a case where it is necessary for lawyers to spend more time on your case. When a case is settled at an early stage, it saves you money in the long run.
As with debt defense, bankruptcy lawyers charge flat fees for their services. It depends on the complexity and type of your bankruptcy case, whether you are charged a flat fee or not. The average cost of a chapter 7 bankruptcy in which there are no assets is $1,500 in legal fees, along with 335.00 for filing fees, plus the cost of Credit Counseling and a Debtor Education Course.
Contingency fee cases are those in which the lawyer's fees are based on a client's success. A contingent fee is most commonly associated with personal injury cases, where the attorney normally earns 33% of the final judgment. Consumer rights cases, however, can also be settled on contingency.
Laws relating to consumer rights, such as the Fair Debt Collection Practices Act (FDCPA) and Fair Credit Reporting Act (FCRA), (TILA), and the Telephone Consumer Protection Act (TCPA), entail fee shifting, which means that if the consumer is successful; the defendant reimburses them.
Would you like to know what questions to ask lawyers during consultations? Read our blog to learn.
