Kentucky Bankruptcy Law

Counsel with Care

What you should know about fee shopping for a bankruptcy attorney

All bankruptcy attorneys get a fair number of inquiries that start with “How much do you charge for a Chapter 7?” This happens in this area of law more than in other areas because the folks seeking help are already strapped for cash. They are struggling to get through the month and so a couple hundred dollars can make a huge difference. This is understandable, but there is more to consider. Even Chapter 7 bankruptcies can be fairly involved: one or more meetings of creditors, reaffirmation agreements, possible challenges of dischargeability, challenges of “abuse” for being in a 7 rather than a Chapter 13, motions to lift stays, challenges to use of exemptions, audits, and amendments to the petition or schedules are some of the possible issues that could arise.

Because not every Chapter 7 is alike, most bankruptcy attorneys carve out exceptions to what the flat fee quoted at the beginning of the case will cover. Some attorneys just prepare the petition and file it and state in the fee agreement or petition that they will not do anything else. Some attorneys will also cover rearffirmation agreements. Some attorneys include audits (which happens to roughly 1 out of every 250 cases) for the same flat fee. So, you could call one attorney who quotes $750.00 attorney fees and another attorney that quotes $1,400.00. At first blush, it seems like the $750.00 is the best deal, but what if that attorney only prepares the petition for you and perhaps goes to one meeting of creditors while the other one covers everything audits and appeals? What if you end up getting your case dismissed or a significant amount of debt undischarged with the $750.00 attorney? Now it looks like the other attorney, the $1,400.00 attorney, was the better deal.

Another quality of representation that one cannot determine by just calling for a quote on attorney fees is how you and your bankruptcy are handled within the law firm. Some law firms are set up to handle a very high volume of cases and quote lower fees. With these, you typically will only meet the attorney once (maybe twice) and all the rest of your conversation is with a secretary or paralegal. While this may work fine for many cases, what if your situation has just one little oddity that requires the greater expertise and attention of the lawyer? What if you end up losing an asset because an exemption was applied automatically rather than with consideration for the big picture?

Other firms treat your bankruptcy the same way they would other legal matters in that they pay special attention to the facts and issues unique to your situation. They strategize the best approach and then direct their secretary or paralegal in making sure all the supporting documentation is pulled together rather than letting the secretary or paralegal drive the case. To do this, they cannot take as many bankruptcies and so they charge more per case.

Clearly I have a bias; I prefer to spend time and make sure each bankruptcy is approached with the best outcome in mind for that individual debtor. I do recognize the economic pressures of the moment to find the cheapest, fastest relief. When people call and ask what I charge, I tell them right away they will find less expensive bankruptcy attorneys. Although it seems hard, I do try to remind debtors that a couple hundred dollars difference in attorney fees is mere pennies to the discharge of thousands of dollars in debt. I then help them figure out a way to come up with those couple hundred dollars. While getting served with a lawsuit can send anyone into panic mode, usually there is still time to come up with a workable strategy.

Whichever approach your choose, the least expensive bare bones assistance or a little more expensive and more expansive assistance, just be aware of exactly what you are getting for the fee you pay. Insist on the items covered by the fee and those excluded from the fee being spelled out in writing. Make yourself aware of what will be charged should you end up needing help with an exluded item. For example, how much will they charge you if the trustee files a motion to dismiss.

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July 5, 2010 - Posted by | attorney fees, Bankruptcy, Pre-filing planning | , , , , , , , , ,

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