Bankruptcy:
Consumer Bankruptcy
[1] Introduction
[2] General Information
[3] Limitations on Filing
[4] The Automatic Stay
[5] Debt Treatment under Chapter 7
[6] Debt Treatment under Chapter 13
[7] Asset Treatment under Chapter 7 and 13
[8] Choosing Between the Alternatives
[9] Case Summary and Outline
[10] Getting Started
[11] Typical Pre-Filing Problem Areas
[12] Filing
 [13] Typical Post Filing Issues
[14] The First Meeting of Creditors
[15] Chapter 7 Interim Administration
[16] Chapter 13 Interim Administration
[17] Chapter 7 Discharge
[18] Chapter 13 Discharge
[19] Typical Post Discharge Issues
[20] Fees and Costs
[21] Bankruptcy Reform
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Booklet Two

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Fees and Costs

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[1] Introduction & Priority Debt
[2] Secured Debt
[3] Executory Contracts & Unsecured Debt
[4] The Bankruptcy Estate
[5] Chapter 7
[6] Chapter 13
[7] Final Matters

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Chapter 20

Fees and Costs



1.0 In General

The “Bankruptcy Abuse Prevention and Consumer Protection Act of 2005" substantially increases the work involved in handling a bankruptcy case. The Congressional Budget Office estimates that the cost of a typical bankruptcy will increase as much as $500. Some experts suggest that a reasonable increase in a chapter 7 should be as much as $2,000 or more in a 7 and $2,500 or more in a 13. A reasonable attorneys fee in a simple case under the old law was established by the OUST at $900 in a typical 7 and $2,000 in a typical 13. At the present time a reasonable attorneys fee in this District for a simple chapter 7 is $1400 and for a simple chapter 13 $2750.

Under the old law the attorney typically billed his time at $190 and his paralegal’s at $40. The normal chapter 7 involved 5 to 9 hours of attorney time and 2 to 4 hours of paralegal time, for a range of $1030 to $1870. However, clients were not actually charged these amounts. The cost of a typical chapter 7 was $600. The new law requires an additional 3 to 5 hours of time.

In addition to these changes the filing fees have also increased under the new law. The chapter 7 filing fee has gone from $209 to $299 and the chapter 13 filing fee has increased from $194 to $274.

Next, the new law requires debtor to participate in an online briefing prior to filing and an online class after filing. Depending upon the provider these can cost as much as $150.00.

Finally, the new law mandates that attorneys verify the information supplied to them. One of the ways this is done is through credit service companies that can provide credit and asset information. Again the attorney must pay for these services. The cost can be $100 or more depending upon the provider.

2.0 No Payment Plans

Many jurisdictions are adopting the ruling of the 9th Circuit Court of Appeals in In Re: Bethea. The Bethea Court stated that attorneys in chapter 7's are not legally entitled to collect their fees after a case is filed because any unpaid amount has been discharged by the Bankruptcy. As a result, if an attorney does not collect his fee in full prior to filing, he is not entitled to be paid any balance that may still be owing on the date of filing.

Judge Thurman of our local Bankruptcy Court has publicly stated that he agrees and will so rule in any case brought before him. In addition, Mr. Jones was told by the former Region 19 United States Trustee that if he did not collect his entire fee in advance he would be sued by the local Office of the United States Trustee and would be forced to refund to every client he had ever represented (in 23 years of practice) any funds he had collected after a client’s case was filed. Please do not ask if you can make payments after filing.

3.0 No Personal Checks

Notwithstanding new legislation that is supposed to speed up the processing of checks, the bank will often not inform us that a check has bounced for as much as a month (or more) after it is deposited. As a result we can no longer depend upon checks clearing within a week. And since payment in full must be received prior to filing, we can no longer accept checks.

4.0 Funds Earned upon Receipt

The Agreement you signed with the attorney provides that all funds received by this office are considered earned upon receipt. This means that once funds are received they are no longer yours, the attorney has earned them, he can spend them as he wishes, and you cannot ask for them back - even if you decide you no longer want us to do any work for you. Your Agreement also states that the attorney is responsible for all of the costs associated with your case. The fee is a net amount and you will not pay additional sums for the court filing fee, the credit briefing, or the education class. This is so the attorney is not required to maintain a Trust Account. Under current Bar rules any attorney with a trust account must collect interest on the funds in that account and turn that interest over to the Bar Foundation rather than to his clients (to whom that money would rightfully belong).

5.0 Keeping Costs Down

5.1 In General

Most individuals who need bankruptcy services could not pay the amounts suggested in section 1.0 above. Further, each bankruptcy case is different. In an attempt to render services at the lowest price possible to the majority of our clients who have relatively simple cases, a fee schedule has been developed that is based upon the complexity of the case.

5.2 Consumer Chapter 7 Cases

The base rate for a simple chapter 7 is $930 for an individual and $980 for a couple (which is an increase of only $380 over that previously charged).

Under the new law there are additional requirements for those whose income or expenses are above the Utah Median as established by the Internal Revenue Service. These requirements include justification of budget expenses and may include requests for additional information from the Office of the United States Trustee as well as a hearing before a judge. For these cases there is an additional $400 charge.

Experience has taught that if you are involved in substantial business activities or you have a lot of business debt your case will take more time, and may involve depositions or additional requests from the trustee. The attorney will also be required to field more questions from creditors. There is an additional $400.00 charge in these cases.

Under the new law there are additional requirements in cases where a foreclosure sale was pending on the date of filing. As indicated in Booklet 1 a creditor could foreclose property in violation of the automatic stay and get away with it if the buyer doesn’t know about the bankruptcy filing. As a result, a notice must be filed with the county recorder in each case where a foreclosure was pending and someone from the attorneys office must appear at the sale to warn potential buyers. There is an additional $100 fee in these cases.

One of the most time consuming parts of preparing bankruptcy pleadings for the paralegal is entering creditor information. A typical case will have no more than 20 creditors. As a result, if your case includes more creditors it will take longer to prepare and limit the time available to do paying work for other clients. There is an additional $100 fee in these cases.

5.3 Chapter 7 Business Cases

Bankruptcies filed for businesses traditionally take more time than consumer cases. Those with assets, even more time. Please be advised that no bankruptcy will be filed by this office in any case where a business is operating on the date of filing. The sole exception is a consumer case in which the debtor operates a personal service sole proprietorship with no employees. Cases with operating businesses are extremely complex and are so time consuming and expensive that the attorney has elected not to do them. The foreclosure pending, or excess creditor circumstances discussed in the previous section also apply to business cases.

5.4 Amendments

Amendments require the preparation of additional documents, a filing fee which must be paid to the court, the mailing of documents to any effected parties, and the payment of applicable postage. No amendment will be filed until the Amendment Questionnaire has been completed and a $50 fee received.

5.5 Contract Limitations

Some individuals are under the misapprehension that if they hire an attorney to perform one task the attorney is then obligated to perform every other legal task they may need without additional payment. An attorney is entitled to reasonable compensation for all of the services he might render. After all, you wouldn’t work overtime hours for your employer if you knew he didn’t intend to pay you. Further, fees are kept low by limiting the work to be performed and not making you pay for services rendered to someone else.

5.6 Chapter 13

In a 13 a portion of the attorneys fees must be paid prior to filing. The attorney is paid the balance of his fee out of the payments you make each month to the court. As long as you complete your plan the attorney will be paid in full. If you do not complete your plan you will still owe the attorney the difference between the value of his services and what the court has paid him. As is the case with Chapter 7, all costs are paid by the attorney.

6.0 The Retainer

In the past many individuals would start a bankruptcy case. However, once the bankruptcy papers were prepared they would fail to sign them. As a result, a great deal of work was performed that was never paid for. The non-refundable initial retainer is to partially defray the cost of pleading preparation for those individuals who decide not to file.

7.0 Additional Services

Occasionally a client will need additional services in connection with a bankruptcy. The following is a list of standard rates at the time this booklet was prepared. Each requires a separate legal contract with the attorney or payment in full prior to rendering the service.

Minimum Fee Schedule

Time and experience have shown that certain tasks take a minimum amount of time and effort to complete. The following represents some of those tasks and their approximate cost. However, it is impossible to determine in advance the exact amount of time that will be necessary in your case. Therefore, the actual time spent by Counsel at $190/hr will govern if it exceeds the minimums set forth below:

Finding and Copying a Discharge Notice                        $5.00

Notice of Bankruptcy Filing                                               $10.00

Phone Calls                                                                           $20.00

Correspondence                                                                   $20.00

Court Notice of Automatic Stay                                        $30.00

Certified Document From Court                                         $30.00

Preparing a Proof of Claim                                                  $40.00

Research Court Files                                                           $40.00

Finding and Copying a Closed File                                   $60.00

Abatement Request                                                             $100.00

Status Review Hearing                                                        $300.00

An Objection to Confirmation                                           $300.00

Motions42

                Motion to Excuse Appearance                          $350.00

                Motion to Set Aside Lien                                   $300.00

                Motion to Convert to 7 or 13                             $150.00

                Motion to Abate Payments                                $300.00

                Motion to Sell Property of the Estate               $400.00

                Motion to Dismiss                                               $600.00

                Motion Objecting to Proposed Dismissal        $500.00

                Motion Objecting to a Proof of Claim               $350.00

                Motion for Early Payoff                                      $400.00

                Other Motions                                                      $700.00

Responding to a Motion

                Motion for Relief from Stay - Vehicle               $250.00

                Motion for Relief from Stay - House or -

                                Business Equipment                            $400.00

                Motion to Dismiss - Non-Payment 13 or -

                                Taxes                                                      $200.00

                Motion to Dismiss with Prejudice                     $400.00


                42All motions include: preparation of the motion, any necessary affidavits, obtaining a hearing date, mailing notices, filing the certificate of service, attendance at the hearing if necessary, and preparation of the final order.  It does not include expert witness fees, research, responses to contested motions, or other services.