Chapter 11 Bankruptcy Basics Part III

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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Brett Weiss, Esq.

Brett Weiss, a senior partner at Chung & Press, LLC, represents people and businesses in all phases of bankruptcy. He has experience in complex individual Chapter 7, Chapter 11 and Chapter 13 bankruptcy cases, and in Chapter 11 small business restructuring and reorganization. Mr. Weiss lectures nationally on bankruptcy issues. He has testified before the Federal Bankruptcy Rules Committee, the Consumer Financial Protection Bureau, and has twice testified before Congress on bankruptcy and credit issues. Brett Weiss is the co-author of Chapter 11 for Individual Debtors, and has written Not Dead Yet: Bankruptcy After BAPCPA, for the Maryland Bar Journal, as well as hundreds of blogs for the Bankruptcy Law Network. With his law partner, he recorded a 13-hour basic bankruptcy training series, and leads intensive three-day Chapter 11 training boot camps. Mr. Weiss has received international media attention in connection with his work. He was interviewed by Barbara Walters on The View, has appeared on the Today Show, Good Morning America, ABC News with Peter Jennings, the Montel Williams Show, National Public Radio, AARP-TV, the BBC World Service, German state television, and numerous local radio and television programs, and been quoted in Money magazine, The Washington Post and The Baltimore Sun, among others. Brett Weiss is the Maryland State Chair for the National Association of Consumer Bankruptcy Attorneys, a founding member of the Bankruptcy Law Network, on the board of the Maryland State Bar Consumer Bankruptcy Council, and a member of the American Bankruptcy Institute, the Bankruptcy Bar Association of Maryland, and the Civil Justice Network. He has been recognized as a “Super Lawyer” every year since 2007 for Maryland and the District of Columbia, and in 2011 received the Distinguished Service Award from the National Association of Consumer Bankruptcy Attorneys for his work on behalf of consumers across the country. Mr. Weiss is admitted to practice before Maryland and District of Columbia federal and state courts, the United States Courts of Appeals for the DC, Fourth and Eighth Circuits, The United States Tax Court, and the Supreme Court of the United States, and has been practicing law since 1983.

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