20 Sep Chapter 11 Bankruptcy Basics Part III
In Part 2 of Chapter 11 Bankruptcy Basics, I talked about some of the basics of Chapter 11 Plans and what a Chapter 11 can do and not do. This series concludes with a discussion of fees and choosing a good Chapter 11 lawyer.
Is Chapter 11 expensive? Yes. Fees vary tremendously from area to area, but you should expect your attorney to charge on an hourly basis and ask for a large retainer before he or she begins work on your case. Fees of $10,000 to $20,000 are typical for simple Chapter 11 cases, and in the large corporate bankruptcies, such as Enron’s, legal fees can run into the hundreds of millions (but don’t expect anything close to that in your case!) Note that “simple” in this context means “simple compared to a complex business bankruptcy,” and describes most individual Chapter 11 cases not involving significant business issues.
Why does it cost so much? The reason that these fees are so much higher than for Chapter 13 cases is that the amount of attorney work and time involved in a Chapter 11 is also much greater. The procedures that an individual filing Chapter 11 must follow are, in large part, the same procedures that Enron must follow.
What type of lawyer do I need? Individual and small business Chapter 11 cases tend to fall between two ends of bankruptcy practice. Very few consumer bankruptcy attorneys handle any Chapter 11 cases. Most lawyers from the large law firms, who handle the large corporate bankruptcies, charge too much for many individuals and small businesses to use them. In most states, there are only a handful of lawyers who are comfortable representing individuals and small businesses in Chapter 11 cases, and charge fees that they can afford.
How do I find a good Chapter 11 lawyer? The best way is probably to contact one of the bankruptcy lawyers from the large firms. They know those lawyers who handle individual and small business Chapter 11 cases, and should be able to refer you to someone who can help. You can also ask at the Courthouse, or check PACER for Chapter 11 cases in your District and see who filed them. Of course, if you’re in Maryland, DC or Virginia, you can call me!
Can I file a Chapter 11 without a lawyer? Yes. But it would be the height of foolishness to do so. This is an area of bankruptcy law so complex that most attorneys who represent individuals won’t do it.
What are the filing fees for Chapter 11? The filing fee is $1,046. For comparison, the filing fee for a Chapter 7 is $306, and for Chapter 13 $281.
These questions only scratch the surface of what’s involved in a Chapter 11 case. As noted, this is a very complex area of the law, and this blog can’t even come close to discussing the many and varied issues that arise in an individual or small business Chapter 11, let alone a large corporate filing.
This complexity does not mean that Chapter 11 is out of reach, however, It offers many benefits, and may offer you the only option to save your home, your car or your business.
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