Bankruptcy is a legal process by which people or businesses can eliminate, or arrange to re-pay, their debts. A bankruptcy lawyer is an attorney who specializes in representing debtors (the people or businesses that owe money), or creditors (the people or businesses to whom money is owed) through the complex bankruptcy process. Read on to learn more about becoming a bankruptcy lawyer.
What Does a Bankruptcy Lawyer Do?
The process of bankruptcy, which is governed by federal law, is complex, and there are many laws that differ between individual bankruptcy and commercial bankruptcy. Because of this, even within the specialty of bankruptcy law, many bankruptcy lawyers specialize in some aspect or another. For instance, a bankruptcy attorney may specialize in representing businesses or other entities, another may represent individuals, and yet another may represent the interests of the creditors in bankruptcy proceedings.
This type of lawyer meets with a variety of potential clients, assessing their particular needs, and determining whether they meet the requirements for bankruptcy. He or she then advises them how best to proceed. A bankruptcy case is begun when a client hires the attorney by putting down a retainer, which is a deposit or sorts that will serve to pay the attorney for his work.
The attorney then completes, with the client’s help, a large volume of paperwork to be filed with the federal court. Soon after, the bankruptcy lawyer attends court hearings, meetings with creditors, and may negotiate settlements in repayment of certain debts.
Professional Requirements to Become a Bankruptcy Lawyer
To work as a bankruptcy lawyer, one must already be a licensed attorney, which requires first a bachelor’s degree, and then a Juris Doctorate (J.D.) degree. A J.D. degree is obtained by attending law school. In law school – which entails three years of study – the first year is spent learning the basics of law. The subsequent two years allow bankruptcy law students to focus their studies on bankruptcy, and on creditor/debtor relations.
Additional Education and Experience
In becoming a bankruptcy lawyer, you may also obtain a Master of Laws (LL.M.) degree in bankruptcy law. This degree program, which takes students deeper into various aspects of this particular area of law, is an internationally recognized postgraduate law degree.
Where Can You Work as a Bankruptcy Lawyer
This depends greatly on what type of client you intend to represent. Most attorneys who represent consumers (individual people) work in small private law firms, or in solo practices, though some also work for non-profit organizations dedicated to assisting consumers in bankruptcy proceedings. Those who represent corporations, whether as bankruptcy debtors, or creditors, most often work in larger private law firms.
Another option to work as a bankruptcy lawyer is to work as in-house counsel for a lender, such as a bank or credit card company, or an automobile finance company. In this case, you would be representing the company as a creditor, working toward obtaining the highest level of repayment as possible through the bankruptcy proceedings.
How do Bankruptcy Lawyers Get Paid
This is an interesting and valid question, considering that most people who need to file bankruptcy do not have a lot of funds laying around to pay a lawyer. Of course, on the lawyer’s end, allowing a bankruptcy client to “owe it to them,” or to make payments, may not be a sound business plan, as they’d be giving credit to someone who is about to wipe out his debt.
The truth is, how a bankruptcy lawyer gets paid depends on the type of bankruptcy the client is filing.
Getting Paid in Chapter 7
Chapter 7 bankruptcy is available to many consumers, and results in the discharge (or wiping out) of all debt – including any unpaid attorney fees. Because of this, the client is required to pay his attorney up front. This eliminates any conflict of interest that would otherwise arise between a client and his attorney-creditor.
How much the legal fees are in a bankruptcy case depends on the complexity of the individual’s bankruptcy. Many consumers, who don’t have a lot of assets, and simply got in over their heads, only pay a few hundred dollars to have a bankruptcy attorney prepare and file their documents, and attend the necessary court hearings.
Getting Paid in Chapter 13
Chapter 13 bankruptcy does not discharge the consumer’s debts, but allows a reorganization of them, with a court-ordered repayment plan of some or all of the debts. This lifts the pressure off the consumer, as their creditors are no longer allowed to pressure them for full payment.
In Chapter 13 cases, the consumer is usually required to pay a portion of the total fee up front, and the rest is paid through the repayment program. Fees for this type of bankruptcy are generally higher, as there is more work involved for the attorney.
Bankruptcy Lawyer Salary
According to the Bureau of Labor Statistics (“BLS”) Occupational Outlook Handbook, for 2018, the median wage for attorneys $119, 250 annually ($57.33/hr). Unfortunately, the BLS does not distinguish between types of law practiced.
On the higher end of the salary spectrum – for those with greater experience, expertise, and seniority – the annual wage approaches the $200,000 mark.
Employment Outlook for Bankruptcy Lawyer
According to the BLS, employment of lawyers is projected to grow at a rate of about 8%, between 2016 and 2026. This is about average growth for all occupations in the U.S. Growth in the field of bankruptcy typically fluctuates with the economy, though not greatly.
|Degree Level||Juris Doctor (J.D.), Master of Laws (LL.M.) in bankruptcy law is optional|
|License/Certification||Licensure in state of practice|
|Key Skills||Creative problem-solving, critical thinking, negotiation, verbal and written communication, ability to work in a fast-paced environment|
|Number of Jobs (2016)||792,500|
|8% growth rate (average growth rate)|
|Median Salary (2017)||$119,250*|
|On the Job Training||Moderate term of on-the-job training|
|Top Earners||Top earners in the bankruptcy field are generally employed by corporate creditors|
(*Source: the BLS)