For simple consumer cases I normally don’t charge a consultation fees for the first consult. In situations with business issues or other complicating factors I do usually charge a nominal consultation fee at a discounted hourly rate. If a consultation fee is assessed and the client retains me to file a bankruptcy case for them the consultation fee is credited toward the attorney fees for doing the case.
There are costs/expenses involved in every case. For example, the court filing fee, a nominal fee for a three bureau credit report we pull for our clients to assist in putting the bankruptcy schedules together and fees for the two mandatory credit counseling courses required under the Bankruptcy Act. Those costs will be the same for everyone.
The attorney fee in any particular case will vary dependent on what kind of case we are filing and on how simple or how complex a case it is. Almost always, one of the first questions I’m asked over the phone when someone is calling to speak to me the first time is “how much is this going to cost?” Honestly, in most cases it is a difficult question to answer without knowing more. I’m not trying to play “hide the ball” with anyone. How much it’ll cost is an obvious concern but at that point it’s a lot like calling a car lot and asking the salesman how much a car costs. Obviously he couldn’t quote you a price without knowing basic things like “What kind of car?”, “What kind of options?” and “Do you want an extended warranty with that?” etc., etc. Contrary to common misconception bankruptcy cases are definitely not “one size fits all.” Your case is going to be different than your cousin’s, your uncle’s or your neighbors’ down the street and sometimes markedly so. Once I’ve had the chance to ask a few questions of my own I can determine whether or not we’re talking about a fairly “garden variety” consumer bankruptcy case or a more complicated matter. Issues that complicate bankruptcy cases can be things like operating a business or self employment, multiple parcels of real estate, avoidable or fraudulent transfers of assets, non exempt assets, trusts, inheritances, etc., etc. If those issues are part of the equation then I need to do an in-depth case analysis and then once I have all the facts then I can quote an accurate fee. On the other hand, if the speaker relates a fairly normal situation for a consumer bankruptcy case then I can at least “ballpark” for them what the fees are going to be for a standard case. On completion of a thorough case analysis then we firm our numbers up. That, I think, is the best practice. Some unscrupulous attorneys will quote low fees over the phone or post them on their web site just to get someone into their office and then jack them up from there. I don’t do that. I wouldn’t like it if it happened to me and I’m sure that you wouldn’t either.
Chapter 13 cases are a bit different. These cases are known as “re-organizations” or “wage earner” plans. In Chapter 13 cases a payment is made into a trustee on a monthly basis. In most cases a significant portion of my fees are paid as an administration expense of the case. Once the chapter 13 plan is approved by the court I file a motion with a fee application asking the court to order the trustee to pay the balance of my fee out of the funds that you are paying in to their office. Those fees will, of course, vary by the complexity of the case and I submit detailed billing and time sheets to verify claim for the services rendered in relation to your case.
“How do I pay the fees?”
Good question. We get asked that a lot. In chapter 7 cases they are most often paid up front before the case is filed. In chapter 13 cases a portion of it is paid before filing and the balance through the plan as described above.
“Can I do the fees on payments?”
Another good question and we get asked that one often as well. Short answer is “No” you can’t, but someone else can.
This is available in Chapter 7 cases only. Back in 2003 the government in its infinite wisdom decided that a good way to reduce the number of bankruptcy filings was to make it harder for people to file bankruptcy by not allowing bankruptcy attorneys to accept payment plans from their clients as had been the custom for many, many years. This was very disruptive and caused a lot of problems for people who really needed to file bankruptcy but found they couldn’t afford it any longer. Yes, you can be too broke to file bankruptcy unfortunately. We see it all the time. Thankfully, the fees for a bankruptcy are relatively low compared to most legal services and the benefit you get from it can be enormous so most people find a way. Generally, if they don’t have it on hand, most people borrow it from a friend or a relative, sell something to raise the funds, save up for it, use their tax refunds or even take a distribution from a pension or life insurance policy to fund the case if that is an option. If none of that works then perhaps we can work with you with a third party guarantor. My office is one of the few that will file a case for someone with zero down on the attorney fees for chapter 7 cases by utilizing a third party guarantor. (see below)
Third party guarantors In those situations where a person can’t come up with the fees necessary to file their case themselves we’ve often agreed to file their case if they can produce a suitable third party guarantor. So what exactly is a third party guarantor and how does that work?
Typically it is a friend or relative who is willing to be responsible for the fees for your case. As they aren’t filing a bankruptcy case with me I am not prohibited against putting them on a payment plan with me for the attorney fees for your bankruptcy case. They are required to sign an agreement which legally binds them to make those payments. The guarantor must be local, work for wages, produce suitable identification, sign all pertinent documentation and give us post dated checks for all the payments for the fees involved in your case prior to filing the case for you. We do surcharge the fees for the service depending on the level of the monthly payment. If you desire to pay your third party guarantor back for the fees they are paying for you and, of course, most people will do so, that is between you and them. Also, note that only the attorney fees can be put on the payment plan with the guarantor. To file the case you will still need to pay certain costs prior to the case being filed. Those would be the filing fee, the fee for the three bureau credit report we pull for you and the fee for the two credit counseling courses you are required to take in order to file your bankruptcy case and receive a discharge. These costs we pay to the court and the third party vendors who provide those services.