Filing for bankruptcy means an economic “fresh start” or a somewhat blank slate. What about all those fees incurred while trying to get that fresh start? Or what about those attorney fees that built up prior to filing for chapter 7 bankruptcy?
In personal bankruptcy, most debts are dischargeable—even unpaid attorney’s fees. The Bankruptcy Code lists fees that are not dischargeable. (Note earlier blog entries regarding dischargeable debts.) They include child support, alimony, debt that was incurred through fraud or false pretenses, luxury items bought right before the bankruptcy filing, government guaranteed education loans, medical costs from driving drunk, reckless failure to pay debts, court fees, and other court costs.
While every attorney is different most, especially bankruptcy attorneys, will charge a “flat rate” to represent you in a bankruptcy case. In other words, you pay a fixed amount for the attorney to represent you. When you pay your bankruptcy attorney depends on whether you file a Chapter 7 (immediate elimination of most unsecured debt) or a Chapter 13 bankruptcy (payment of your debts, in full or in part, over three to five years). In a Chapter 7, most pay the lawyer prior to the filing of their case because any unpaid fees would be wiped out by the filing of the case itself. In fact, the Bankruptcy Courts prefer that debtor’s counsel not be creditors of their own debtors. Once debtor’s counsel has been retained, we can start representing the debtor. However, until the retainer and filing fee is paid in full, the case will not be filed. In a Chapter 13, you may be allowed by your counsel to pay some or all of your attorney’s fees through the Chapter 13 plan – over the course of several years, but that is the rare situation. When searching around for a bankruptcy lawyer, call at least several attorneys in your area to compare their fees and competency being sure to ask if bankruptcy is an area they specialize in, for how long and the number of cases they file each month.