Kentucky Bankruptcy Law

Counsel with Care

Are the fees you are paying your bankruptcy attorney fair?

I have addressed issues around bankruptcy fees and, more specifically, fees in a Chapter 13. As a result, I have spent considerable time contemplating how to make the fees I charge fair to the customer and fair to myself. The difficulty in this task is that many people calling around for a bankruptcy attorney just want to know a bottom line price. I have answered many calls where the one and only question I am asked is “how much do you charge for a Chapter 7 bankruptcy?” The only truly honest answer any bankruptcy practitioner can give is, “it depends.” But, that answer is most unsatisfactory to the customer and they will typically keep calling attorneys until someone gives them a quote for a rock bottom price.

The problem, of course, is that even if an attorney says “$750.00 for a Chapter 7”, that is not the end of the story. The customer will go in, do the paperwork, and discover that the real answer actually is, “it depends.” You see, the most important concept attorneys are taught in law school is “it depends.” Nearly every correct answer to a law school exam question has within it the idea of “it depends” even if those exact words are not used. That is because most answers to legal issues do depend on multiple variables; few things in law are really cut and dried or open and shut. If they were, society would not need lawyers. Hmm, maybe I should not have put that idea out into the public consciousness.

So, I have tried to narrow down those factors that affect the attorney fees in a Chapter 7. Obviously, narrowing down precludes having an all inclusive list, but the main factors I settled on were: 1) the number of creditors; 2) the nature of the case (consumer versus business related debt); 3) the existence of certain types of debt, such as tax debt; and 4) the expectation of reaffirmations of secured debt. The debtor that has primarily consumer debt and few creditors, no tax debt and no anticipation of reaffirming secured debts would pay well below my prior standard fee.

There are a few reasons why I settled on the factors. More creditors means both more time with data entry and an increase in the likelihood of unforeseen complications, including debtors accidentally overlooking one or two in the crowd. Consumer debt cases take considerably less investigation and strategizing than cases brought about as a result of business debts. Tax debts require additional work to determine whether they are dischargeable and increase the likelihood of complications. Finally, reaffirming secured debts takes additional work and creates a higher liability upon the attorney who certifies the reaffirmation.

Now, instead the highly truthful but incredibly unsatisfactory “it depends” I can ask four quick questions and tell the customer that, based on their answers (that is a necessary lawyer caveat by the way), the cost would be $x.xx.

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March 12, 2011 - Posted by | attorney fees, Bankruptcy | , , , , , , ,

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