Timing Is Everything: When And How Is A Bankruptcy Attorney Paid?

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An attorney’s fees for representing a debtor in a bankruptcy case are not set by the bankruptcy court. They may be approved by the court in some situations but debtors and attorneys are free to negotiate a fee for representation in a bankruptcy case. Most bankruptcy lawyers charge a flat fee for Chapter 7 or Chapter 13 bankruptcies, but in some rare situations may charge an hourly rate.

Not only cost but when payment is due greatly depends on whether a Chapter 7 or Chapter 13 case is filed. Prospective clients and bankruptcy debtors almost always ask if it is possible to file a bankruptcy case and pay at a future date. The answer is basically “yes” and “no.”

In Chapter 13 cases, debtors may pay some or all attorney’s fees through the Chapter 13 repayment plan. This is negotiable between the bankruptcy debtor and his or her attorney. Most attorneys require some down payment before the case is filed with the remainder to be paid in the Chapter 13 plan.

Just about all of the federal districts have basic guideline fees that attorneys may charge for a Chapter 13 bankruptcy case. For average Chapter 13 cases, attorneys may not charge more than this guideline fee. Often, an attorney will charge a flat fee for the minimal necessary services for a case, and then charge an hourly fee for any extra services such as drafting and filing an adversary complaint.

Chapter 13 guideline fees are different for each judicial district. However, they are typically between $2,500 and $6,000 depending on whether you are an employee or have your own business. This fee is $3,500 in the Southern District of Florida.

However, it is important to know that attorney’s fees in Chapter 7 bankruptcy cases must be paid before the filing of the bankruptcy petition, i.e., the opening of the case. This is based purely on a somewhat ironic technicality. If unpaid at the time of the commencement of the Chapter 7 bankruptcy case, these fees would simply become one more unsecured debt eligible for discharge, protected from collection by the automatic stay. This is the sole reason that bankruptcy attorneys require Chapter 7 debtors to submit payment in full before filing their Chapter 7 case.

To schedule a free consultation with our Fort Lauderdale bankruptcy attorneys, contact us today by calling 954-523-HELP (4357).