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Regarding attorney's fees in a C7 asset case

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  • Regarding attorney's fees in a C7 asset case

    Hi everyone

    My bankruptcy attorney requested a $3300 retainer from the start, which was paid in full. What was thought to be a be a no-asset case (which is what my attorney originally told me), turned into an asset case, and now that it is over, my attorney is requesting an additional $8200 from me for extra work he did. He is billing me for a meeting with an accountant, he is billing me for time spent talking to the trustee, he is billing me for time spent leaving voicemails for the accountant and the trustee. Is this common and/or reasonable for him to do this?

    Now, he did do extra work, but I feel that most of this is his fault, as he did not tell me this would be an asset case, requiring all this extra work. And I am not suggesting that I owe him nothing, but time spent leaving vms for people seems a bit extreme.

    Thank you for any insight into this!

  • #2
    What were the assets?

    Where those assets fully disclosed on Schedule B when the case was filed?

    What does the fee agreement you signed cover for that original $3,300.00?

    What does the fee agreement you signed state relative to an investigation by the Trustee (Rule 2004 exam) and/or other meetings that may pop up during the course of the case?

    Des.

    Comment


    • #3
      Your situation is not the attorney's fault. The thing is, whether you are or not an asset case is not under the attorney's control. Your attorney didn't "cause" your case to be an asset case, but either information was unclear, withheld, or missed that credited the situation.

      Attorney fees in chapter 7 are divided into pre-filing and post petition (after the case if filed). Any money paid when you hire the attorney handles the pre-filing portion of the case. The attorney cannot hold money he or she has not earned (by spending time on the case) for work to be performed post petition (after filing). As a result, yes, the attorney will bill you for time spent during the post petition phase. Typically, if not much happens, the attorney won't bother and it is fairly standard that the 341 meeting of creditors is included gratis. However, if the attorney spends time on issues that come up (asset case, creditor inquires etc), that can be billed. Of course, the retainer agreement should disclose this possibility.

      Comment


      • #4
        What were the assets? IP

        Where those assets fully disclosed on Schedule B when the case was filed? Yes

        What does the fee agreement you signed cover for that original $3,300.00? I can't type the entire agreement, but basically, the consul, petition prep, 341 meeting, comm with debtors and the trustee, and some other stuff.

        What does the fee agreement you signed state relative to an investigation by the Trustee (Rule 2004 exam) and/or other meetings that may pop up during the course of the case? There is nothing specific. The only specific thing that's in there is that there will be a charge for addtl court appearances. That's part of the thing that bugs me - that it is so vague.

        Comment


        • #5
          "Your situation is not the attorney's fault. The thing is, whether you are or not an asset case is not under the attorney's control. Your attorney didn't "cause" your case to be an asset case,"

          Never said it was. You want to direct fault? That's me, for letting my finances get out of hand, and letting this go too far. There is no one to blame here but me. However....

          "either information was unclear, withheld, or missed that credited the situation."

          I made extremely clear to the attorney what I did for a living, that I had ip, and how I received my income.

          The fact of the matter is that my attorney did not advise me properly. Had he, I would have never filed.

          Some of the stuff on the bill I am fine with. Like the extra court hearings. But, I am paying almost $2k to have him leave vms for the trustee and for accountants. Is that not out of line?

          Thank you for the time.

          Comment


          • #6
            If it was necessary for him to contact the trustee and accountants, the charges are justified. If the services are not included in a flat fee, attorneys bill for all of their time on a case, even if it was to call somebody and leave a voicemail message.

            It sounds like your attorney thought the trustee would not be interested in the IP and was wrong. There are never any guaranties and hopefully he didn't tell you that it definitely would not come up. If you feel like you received bad advice or that the fees are not reasonable for the work required, talk to him about it and see if he will reduce the fees.
            LadyInTheRed is in the black!
            Filed Chap 13 April 2010. Discharged May 2015.
            $143,000 in debt discharged for $36,500, including attorneys fees. Money well spent!

            Comment


            • #7
              Maybe I am a bit naive but what does "IP" mean?

              If you were/are self employed or have a business interest such as a corporation, partnership or LLC, it was the Trustee's job to determine if the asset had any non exempt value. If, as the controlling member of an operating business, you were required to prepare corporate (or personal) tax returns for pre petition years, then my guess is you needed to hire an accountant to do that. Alternatively, the meeting with the accountant was in the nature of information gathering by the Trustee to determine the true value of the entity/asset.

              The fee agreement you signed should have been pretty detailed. It should have advised you exactly what the flat fee would and would not cover. The fee agreement we use is 3 very long pages and the list of items the flat fee does not include is quite extensive. I can tell you that sitting at a 2004 exam deposition or combing through the 2004 exam documents before they are bates stamped and sent to the Trustee are not included in a flat fee. For those type items we bill hourly and require a separate fee agreement and payment of a retainer. (Please note that some jurisdictions, including mine, do not always approve of this type of "un-bundling" of services - judges tend to look at the issue on a case-by-case basis.)

              I can also tell you that our clients who run a business, if we go the avenue of a 7, are well informed as to the problems they may face as such cases are not cookie-cutter and do require a lot of additional work. Lastly, if it is a business that my client does not want to risk losing to a Trustee, he/she does not file a 7.

              I hope in the end you get to keep your business. I cannot comment on the attny bill without seeing the entire fee agreement. If you have a fee dispute with the attny contact the local Bar Association to see if it can assist with fee dispute resolution. In my state there is such a program and it works.

              Des.

              Comment


              • #8
                despritfreya, IP=Intellectual Property
                LadyInTheRed is in the black!
                Filed Chap 13 April 2010. Discharged May 2015.
                $143,000 in debt discharged for $36,500, including attorneys fees. Money well spent!

                Comment


                • #9
                  Originally posted by LadyInTheRed View Post
                  despritfreya, IP=Intellectual Property
                  Thank you. That would be an asset and the Trustee would have to investigate if there was any non exempt value to it. Maybe the Trustee suggested that the debtor purchase the asset. Maybe the Trustee came to the conclusion it had little or no value and abandoned it. Interesting.

                  Des.

                  Comment

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