Paying the bankruptcy lawyer

How Can I Find Out Who I Owe Money To

Atty. Dave Falvey

Action Advocacy, PC is an officially recognized Federal Debt Relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.

http://www.actionadvocacy.com/


Paying the Bankruptcy Lawyer


How do legal fees work in bankruptcy?

Debtors should know that there is no preset bankruptcy fee. This means the federal Bankruptcy Court does not have a predetermined fee that lawyers can charge. It is up to the individual lawyer. Having said this, the court does have some guidelines to make sure the legal fees don't get out of hand.

Attorneys who charge more than the local guidelines will have to have good reason why their large fees should be paid. All legal fees must be approved by the Bankruptcy Court. This is to make sure the debtor isn't taken advantage of by the attorney.

Whether you can make payments to your bankruptcy lawyer over time depends on whether you file for Chapter 7 or Chapter 13 and the policy of the bankruptcy court. Some bankruptcy lawyers charge a set fee. This means that no matter how many hours the case takes, the debtor will only have to pay the pre-agreed to fee.




How do legal fees work in bankruptcy?

Lawyers often charge less for a Chapter 7 bankruptcy than a Chapter 13 bankruptcy because a Chapter 7 requires less paperwork and takes less time. Another fee factor is whether it is likely that any issues will be contested by the creditors or the Bankruptcy Trustee.

Debtors should know there is a difference between lawyer fees and court costs. The Bankruptcy Court does have some court costs of its own. These costs usually have to be paid by the debtor at the time of the filing of the bankruptcy petition. There are some exceptions for really poor debtors.




Chapter 7

These cases normally cost much less than a Chapter 13 costs. Still, there can be variations even within Chapter 7 cases. Some of the pricing factors are:

* Is the means test clear or will the lawyer have to fight to make clear the debtor qualifies for a Chapter 7 and doesn't have to file a more costly Chapter 13?

* How much the debtor has available to pay the lawyer.




Chapter 7

Whether the debtor will be filing any reaffirmation agreements which means the debtor agrees to repay one or more debts even though the debt could be fully discharged.Even the most simple Chapter 7 requires that the lawyer:

* File the Bankruptcy Petition

* File the Appropriate Income, Expense, Asset and Debt and other Standard Schedules

* Attend the Creditor's Meeting with the debtor

* Make sure the debt is properly discharged

* Handle all phone calls and letters from creditors and from the Bankruptcy Trustee




Chapter 7

Normally, debtors have to pay the lawyer his/her legal fee before the bankruptcy petition is filed. This is because the aim of Chapter 7 is to eliminate all unsecured debts.

The legal fee is not secured. Delaying payment might mean the lawyer's fee will be discharged too.

Most lawyers will work with the debtor to help the debtor gain time to pay the legal fee. This means the lawyer will delay the filing date if possible. If there's a danger of an immediate foreclosure or immediate car repossession, then the debtor will have to pay the lawyer faster or risk losing a valuable asset.

Since most debtors with homes or cars often file a Chapter 13, delay in filing the Chapter 7 is often practical.




Chapter 13

As mentioned, these cases are more difficult than Chapter 7 cases. Still, there can also be variations. It can depend on which assets the debtor wants to save, how easy it is to come up with a viable plan, the amount of debt obligations, whether there are any business debts and a range of other issues

If you cannot pay your bankruptcy attorney's fees all at once, you may be able to make the payments in installments.

Paying bankruptcy lawyer fees in installments is always possible in a Chapter 13 case.




Chapter 13

Chapter 13 attorney's fees are handled differently than the Chapter 13 case because Chapter 13 does include a payment plan. Typically, the lawyer will agree to have some of the fee paid up front, before the Bankruptcy petition is filed, and then agree that the rest can be paid out as part of the payment plan. Chapter 13 has a payment plan component that lets the debtor pay his/her obligations over a three to five year period. Many debtors pay the arrears on their home loans and car loans during this period.

Paying the lawyer fees under a payment plan is a little different than the other payments plans. The aim is to pay the lawyer fairly quickly so the lawyer doesn't have to wait the full three to five years to get paid. The plan will typically front-load the lawyers’ fees so the lawyer is paid fairly quickly.

Other Solutions: Some jurisdictions may let the debtor file a Chapter 13 just to pay the lawyer and then convert the case to a Chapter 7 after the lawyer is paid. Other jurisdictions frown upon this arrangement.
