Payments to a Bankruptcy Lawyer

13 May Payments to a Bankruptcy Lawyer

You need to file bankruptcy now, but don’t have enough money to pay the entire fee.  Why won’t the lawyer take payments?

Because of the changes in bankruptcy laws passed by Congress and instituted in October of 2005, it’s much more complicated now to file a bankruptcy than it used to be.  It’s more expensive, because not only have the court charges gone up, but there’s more to do for the attorney’s office.

It would be nice to be able to make payments to the attorney for his or her work, but the Supreme Court of the United States has said that in a Chapter 7 bankruptcy, once the bankruptcy petition is filed, any money owed to the lawyer for work already done, is discharged.  Thus, once he you file, you don’t owe the attorney anything for work already completed, like preparing the papers.

This is true in a Chapter 7 bankruptcy but not in a Chapter 13.  Remember that in a 13 you can structure payments to the attorney through the plan.  It’s only in a Chapter 7 where, upon filing, the attorney is not entitled to any further compensation for any work he or she did prior to filing.

That’s why all bankruptcy attorneys require the fees to be paid up front: so they can be paid for their work and there’s plenty of work to do under the new bankruptcy laws.

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Douglas Jacobs is a California bankruptcy attorney and partner in the Chico law firm of Jacobs, Anderson, Potter & Chaplin. Since 1988, Mr. Jacobs has taught Constitutional law and Debtor-Creditor/Bankruptcy law at the Cal Northern School of Law. He has served as Dean of Students since 1994. He is a frequent lecturer on the subject of consumer bankruptcy law, and has spoken at both state and national levels.
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