Interviewer: What are the costs associated with bankruptcy filing?
The Bankruptcy Costs Include Court and Attorney Fees
Jeanne: There’s a fee to file at the court. Chapter 7 is $306 and for Chapter 13, I believe the court fee is $281. Attorney fees we generally don’t like to disclose until we’ve had a time to sit down and talk with someone. Here is the reason why, I can do a thousand consumer bankruptcies that are generic.
The generic one size off price fits that situation but then on the thousand and first case, there are some serious issues that are going to have to be litigated and so those people we have to be quoted an hourly rate. The fees that attorneys charge bankruptcy clients do have to be reported to the bankruptcy judge and they are reviewed.
The Bankruptcy Judge Will Review and Approve the Fees That an Attorney Can Charge
The bankruptcy court has set a top level and we cannot charge more than that without having the court thoroughly review our work and deciding if we have appropriately charged the debtor. This is unlike any other area of law and differs if you go to an attorney because of a car wreck case or you want to sue your neighbor because they knocked down your fence.
After Review, the Judge Has the Discretion to Reduce the Attorney Fees
There’s no independent review of that attorney’s fee schedule and the attorney doesn’t have to disclose that to the court as part of the regular paperwork. In every single case, we have to disclose our fees to the court and if it goes beyond the court standard for that area because it does vary by region, then the court requires us to file justification paperwork and it is reviewed seriously and the judge can deem the fees to be excessive. If so, the judge has the discretion to reduce the attorney fees.
Most Attorneys Have to Review Each Bankruptcy Case before Quoting a Fee
I won’t actually name a price because that might a place that would fit 99% of the people but the 1% that has a really very complex case and lots of issues outside of the routine, they’ll want that price and that’s the one we have to go talk to the judge because it’s not typical.
It’s like the city of Detroit, the attorneys that are working on that case, that’s all they’re doing. They don’t have more than one client. That is their one client and they’ll be locked up in that for years to come. That’s definitely a different situation than handling a bankruptcy for a couple.
Interviewer: I think too that a lot of people just associate bankruptcy filing with something as being so expensive.
Attorney Morales’ Firm Offers Financing for Clients Filing Bankruptcy
Jeanne: It’s very cost effective and again, without using actual numbers, we do offer financing on our fees if necessary. People are usually shocked when you can get rid of $400,000 worth of debt for relatively nothing.