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Cost of Filing Bankruptcy -
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Are Attorney Fees Negotiable? Attorney's fees are generally negotiable between the client and the attorney, and will vary on the location of the court, the complexity of the case, whether it is a business or consumer case, and the Chapter being filed. Often, the rules and guidelines of the local bankruptcy court will have a schedule of services which an attorney is required to perform in order to earn a particular fee. Generally speaking, attorney's fees tend to be higher in the larger metropolitan areas where the cost of living is higher. Attorney's Fees Are Subject to Review by
the Court
All fees are subject to review by the bankruptcy
court as to reasonableness. Attorneys who overcharge and gouge their
clients face the very real prospect of having to "disgorge",
or give the money back. These attorneys generally do not last very
long in a particular area, once their modus operandi becomes apparent
to debtors, the trustees, the courts, and others in the bankruptcy
community. Chapter 7 Attorney's Fees In a Chapter 7 consumer case, attorney's fees can range between the "bargain basement" prices advertised by some attorneys, to wit, $ 300.00 to $ 1,000.00, to the middle ground somewhere between $ 1,000.00 to $ 2,200.00, and then up to $ 3,000.00 at the higher end. The fees in business Chapter 7 cases tend to be higher, as they are generally more complex. These fees generally start at about $ 2,500.00 and to up to $ 5,000.00 or more, again depending on the difficulty of the case and the issues presented.
Chapter 11 Attorney's Fees The Chapter 11 attorney wishes to obtain as large a pre-petition retainer as is possible, from which he can draw during the Chapter 11 while he performs his services. The majority of the Chapter 11 cases fail, so often an attorney will not be compensated for his services unless he was paid upfront. In many of the smaller Chapter 11 cases, which might be called "glorified Chapter 13s," the retainer might be somewhere in the neighborhood of $ 7500 to $ 20,000 or more. In the more complicated cases, retainers can be anywhere in the range from $ 25,000 up to $ 100,000 or more. Chapter 13 Attorney's Fees
These fees are going to vary from court to court,
and state to state. In most courts, there is a "no look"
base fee schedule. The fees will be awarded to the attorney, without
the requirement of a fee application. The fees in a standard Chapter
13 case can range from about $ 2,000.00, up to $ 10,000.00, again
depending on the The fees increase, for instance, if there are: real estate loans; unpaid taxes; domestic support obligations; repeat bankruptcy filing; additional real property; student loans; car loans; 25 or more creditors; and an operating business. If the attorney wishes additional compensation over and above the base fee, then he is permitted to file a fee application with the court. The court is permitted to award additional fees, if in the Court's opinion the additional work was necessary and performed in a reasonable manner. In some business Chapter 13 cases, fees can go up to $ 30-40k or more, especially if litigation is involved. The initial retainer is paid by the debtor. Thereafter, attorney's fees are paid through the Chapter 13 Trustee's Office, as a Chapter 13 administrative expense.
If You Cannot Afford an Attorney
Some debtors cannot afford to hire an attorney. There are
a number of nonprofit and pro bono services available for such persons. You should
consult your local bar association for a list of these persons and agencies. Since
filing a bankruptcy case is a civil, not criminal matter, no representation is
available from the Office of the Federal Public Defender. If, however, a criminal
proceeding for a bankruptcy crime is filed against a debtor, he or she may be
eligible for such representation. In Summary
The cost of filing
bankruptcy consists of the court filing fee and attorney's fees.
Attorney's fees
Selection
of an attorney should be based not only on price, but on expertise
and reputation in the community. Persons who cannot afford an attorney
to help them file bankruptcy can seek help through legal aid clinics,
pro bono service providers, and other nonprofit groups.
Written by Henry Rendler |
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