I was just reading a post somewhere else about using a lawyer for bankruptcy, and was thinking that the lawyer was one creditor who would not be particularly pleased if you discharged their debt. So do they want cash in hand before they’ll even talk to you?
When I went in for my bankruptcy, the lawyer wanted $300.
However, he was willing to take payments, and once the amount was paid the bankruptcy would actually be filed.
While I was making payments, he handled the creditor phone calls and the one creditor who was pressing court action.
I recently saw ads on television that state that attorney fees aren’t paid until after the bankruptcy. Perhaps this is due to some special law.
Although the question is: when does a creditor actually become a creditor? Do you owe an attorney at the beginning of the job or at the end?
I would guess that a bankruptcy attorney might want payment up front, since you have a history of payment problems, hence the action being taken!
But hubby doesn’t take bankruptcy cases, so…
I’m not a lawyer, but have worked in the bankruptcy area for a while now, so my $0.02.
Most lawyers do get paid up front, depending on the chapter filed under; many want cashier’s checks or money orders (as does the Court itself). Bankruptcy is Federal jurisdiction; I’m pretty sure there’s no law regarding paying after the case. The paperwork lists any fees you’ve paid anyone relating to filing the case, anyway.
In cases where money is recovered and disbursed to creditors, however, any unpaid fees get priority, after the IRS and other taxes. This often happens in Chapter 11 and 13 cases; perhaps that’s what the ads were referring to, rather than Chapter 7, which most people file.
Also, it’s not unheard of for attorneys in bankruptcy mills to not exactly disclose all information to prospective clients. I know of instances where someone thought a case was filed but the attorney didn’t file it until the fees were paid. Whether the client misunderstood or was misled is unknown and unknowable.
It seems to me that the reason that people file for bankruptcy in the first place is because they can’t pay their bills. If they have no money to pay their bills, then how does the lawyer expect them to come up will his fee before he even files any of the papers?
I have a friend at work that hasn’t filed for bankruptcy for just this reason. The lawyer wants all his fees and filing fees up front before he does anything.
It would make more sense to me for the lawyer to get a small retainer, file the paperwork and when the bankruptcy is final, then the person could pay him, since he would now have the money.
Bankruptcy, at least the simple versions (7NA) is cheap. One paychecks take home would likely do it. At aguess, some $500>1000, depending on area. Remember, you don’t have to worry about paying any bills out of that paycheck- or the ones after.
As to lawyers wanting cash up front for filing a bankruptcy:
There is a difference between being bankrupt and being homeless.
I declared bankruptcy in December of 1996. The lawyer’s fee was $300 up front by certified check or M/O.
My da’s an attorney, and he handles bankrupcy cases exclusively. What he does is take the filling fees up front, and lists himself as a creditor on the plan to get his fee.
As near as I can tell, the way most of these bankrupcies work is that the attorny develops a payment plan for his client thats based on debt, creditors, other expenses (food, etc), and the law. Its not that big of a deal for a lawyer to mark himself under debts.
ASKOL
IAAL, but not a bankruptcy one, but I do deal with bankruptcies in my cases from time to time.
Bear in mind that attorneys fees for filing are of the highest priority, i.e. they get paid first, on a par with (IIRC) even the IRS. So unless the debtor is in a coma, the lawyer will get paid.
This is a WAG but I suspect that this rule is due to two things:
- Lawyers helped write the bankruptcy code, remember?
- (More seriously) If people started doing pro se (do-it-yourself) bankruptcies, the courts would quickly turn into mush the way they do in some jurisdictions where there are a lot of pro se divorces, property records, etc. I don’t want it to come off too obnoxiously but when people file things pro se there is a much greater risk of it being screwed up. There’s a reason I don’t do my electrical work “pro se” either, if you know what I mean.
It can take 20 times the time, money, and court resources to undo a botched pro se filing than if it was done right in the first place. Indeed, I have never seen a pro se bankruptcy although I think it would be unconstitutional for a person to be prohibited from filing one without an attorney.
Just my two cents.
Working at a bank and handling our end of bankrupt customers, it appears that if the customer is filing a Chapter 7 the attorney gets the money up front and it is a standard flat fee. In most cases, a Chapter 7 is pretty simple and most of the work is done before filing (making sure to name all the creditors, and advising the debtor on which debts to reaffirm). After that they will attend the 341 meeting with the debtor and they’re pretty much done.
In a Chapter 13 filing, the attorney usually will get a portion of the fee paid up front. The rest is either included in the plan and paid over the duration of the bankruptcy through the trustee, or the attorney will petition the court to have the trustee disburse funds from the bankruptcy estate as fees accrue.
JohnW77707 - I see pro se bankrupcy filings on occasion (all the one’s I’ve seen were Chapter 7’s). Most went off without a hitch. On the other hand, I’ve seen numerous occasions where attorneys who don’t do a lot of bankruptcy work completely screw up a Chapter 13. One guy objected to our Proof of Claim because he didn’t understand the difference between a total claim and an arrearage claim. The he advised his client not to make their post-petition payments (that they were to pay direct to us under their own plan). Sheesh!! (I once had to explain the ramifications of reaffirming a debt to a Chapter 7 attorney though too, so be careful who you pick to represent you.)
JohnW77707 - I see pro se bankrupcy filings on occasion (all the one’s I’ve seen were Chapter 7’s). Most went off without a hitch. On the other hand, I’ve seen numerous occasions where attorneys who don’t do a lot of bankruptcy work completely screw up a Chapter 13. One guy objected to our Proof of Claim because he didn’t understand the difference between a total claim and an arrearage claim. The he advised his client not to make their post-petition payments (that they were to pay direct to us under their own plan). Sheesh!! (I once had to explain the ramifications of reaffirming a debt to a Chapter 7 attorney though too, so be careful who you pick to represent you.) **
[/QUOTE]
Yeah. Please don’t get me wrong. I am all for clients being informed and not just so trusting of attorneys that they get fleeced by the bad or overpriced ones. I was just speculating that “the system” has a vested interest in wanting attorneys to handle the proceedings and therefore is going to make sure that attorneys can go into the deal knowing that they will be paid for their work.
SmackFu, it doesn’t mean the person doesn’t have any money, it just means they owe more than the money they have.