Lawyer fees? What's reasonable

[CA3kids]

We've seen two lawyers so far in our research - one said flat fee, $1200, before he'd file, then $50 per month throughout the course of the payments (we'll be on a five year plan). This lawyer gave us two different estimates of our possible payments - first he said $350, then $1600 (which is about what our charge cards minimums are now, that we can't make every month!)

The other one said he will start after we pay a $2000 retainer, and we fill out all the paperwork which he then inputs to get ready for the means test. Another $1000 for filing, then anything else - court, etc? is all extra at an hourly rate (of $300+)! The last two would be built into the plan.

My question - I thought I read that there is a set amount or maximum that the lawyers could charge for this, but these are pretty different rates, even if you figure $3000 more over the life of the payment from lawyer #1 - with whom hubby wasn't too pleased anyway.

One more lawyer to talk to next week, but wondering what's reasonable - we are high income filers with no assets and 100K of cc debt plus $25K in student/Parent PLUS loans. Lots of expenses (live in one of the most expensive areas of the country to live, so at least IRS costs are listed high as well)- as we all have, but have not been spending extravagently for the past 5 years at least as we have tried to get out of this mess.

So, what's a range or a reasonable rate from those of you who have filed chapter 13 under the new law?

[FilingOnMyOwn]

That $50 a month for 5 years is the most ridiculous thing I've ever heard. He really must think you guys are stupid.

Chapter 13 does cost nearly twice that of chapter 7, but I'd be looking to spend no more than $2,000-$2,500. The filing fees I believe are only $274, so that other lawyer wanting an extra $1,000 for filing was smoking something too.

You should really do alot more than just a couple consults. Being your first 2 were already not good, you should do at least 3 more consultations before you really start getting an idea of what it *should* cost in your area.

[CA3kids]

Thanks, sometimes I get so confused with all the things to think about and plan to be able to do this that I think I'm missing things. It's great to have this forum to find out the truth from people who have done this already!

[tofargone]

It must be dependant on where you live. In Wisconsin I paid $1500 plus fees so about $1800 which covers most everything over the next 5 years. The people before me in their 341 meeting were charged 3K, the trustee told the lawyer that was excessive and that he was going to recomend a reduction. ( whatever that means )

[SinkingFast]

Ch 13 here can cost $2500-$3K. Depending on the attny you use.

Pay a portion of the fee up front. Like $1K, and the remainder is paid out of your Plan Payments.

In a Ch 13, the first Creditor to be paid is your attny. So your first 2-3 months, or so, of Plan payments go to the attny.

You can check your local Court's home web page. Some Courts post announcements regarding fees allowable. Some have it listed in their local rules. You might find it there, the max attnys in your area are allowed, by the Court, to charge.

[Ortgeist]

I'm going to use the Bankruptcy Company here in St Louis. For a Chapter 13, the courts filing fee is $274. The fee to retain the lawyer is $50 and is also applied to his fees. Credit counseling is free since my lawyer is a member of Hummingbird credit counseling (they pick up the fee if you decide to file with their law firm). The attorney's fees are set by the court at $3000 for up to five years of representation for in this case. The payments on the balance are spread out throughout the first few years of bankruptcy. Now if a creditor challenges discharging my debt, then it costs $1000 to retain the lawyer and $200 an hour representation. That to me is expensive! The lawyer did say he has not had but one creditor do this to one of his clients. He told us that the system is flooded with work and that the creditors mostly don't object unless you spent alot on the account within the past 90 days. The only thing we put on our card in the last 90 days was my phone bill and education that was required for me to keep my registration status in my job. He said that it wasn't an amount that should even be an issue. So, I hope he is right. I guess fees can fluctuate here and there between lawyers. I probably should get a second and third consultation with other lawyers.

Good luck with all of this.
I actually feel like this is the best thing I can do for my family at this point. My kids need to eat and I have to get a new roof on the garage before it starts to cave in on the cars!!!

Carrie

[DeadManCrawling]

We are paying 2500 plus filing fees in Middle Florida BK district.

Our case spans two businesses, one a corporation, one a sole proprietorship, and mixed business and personal debts, with an additional trust fund in the mix for our son. Our variables are pretty high, as far as how things can be looked at, so he accounted for a lot of extra work.

Normally I believe he charges 1800 and filing fees for a straight 13, and about 1500 on a straight 7.

[HHM]

Actually, the $1200 plus $50 per month is IN the ballpark (that is $4,200 total for the chapter 13). But the mechanics do not make sense...I will explain that point later.

The fees vary by district, but there are 2 aspects to an attorney's fee in a chapter 13. Strictly speaking, the BK Law requires attorney's to submit requests for fees to the court. Nearly every district has streamlined this process by setting a maximum amount an attorney can charge for a chapter 13 and NOT submit a request for fees. If an attorney needs to charge more than that set maximum, then the attorney must make a motion to the court. And it is not uncommon for attorney's to exceed the maximum, especially when issues come-up 2 or 3 years into the plan.

The set maximum varies from district to district. Where I live, the standard rate is about $4,200-$4,600 for a basic chapter 13. And as you discovered, most attorney's require some sort of upfront deposit and then role the remainder of the fee into the chapter 13 payment plan. Thus, the only part about the $50 per month thing (that attorney 1 quoted) that doesn't make sense is why it would be $50 per month. The balance of attorney's fees is paid off as an administrative expense of the chapter 13 plan. When you make your first few payments to your chapter 13 plan, the trustee turns around and writes your attorney a check.

To summarize, the fees you have been quoted are by no means outrageous and are about par for the course. As for the filling out of paperwork yourself, back up and think for a second, how is the attorney supposed to get the information he needs to do your BK unless you supply it to him?

There will be variation in fees from district to district...but $3000 is probably the lowest. If you get a quote of less than $3000, you should actually be a bit skeptical, odds are there will be some hefty nickel and diming if an attorney quotes less than $3000 for a chapter 13 (and sometimes the attorney will bait and switch, the price they quote you is what you need to pay as a deposit, i.e. $1,200, but then when you get your chapter 13 plan, you see an additional $3000 in attorney's fees listed), and depending on district, the fee could be as much as $4,800. Also, keep in mind, the bulk of your fee gets paid by the Chapter 13 trustee from the funds you pay into your Chapter 13 plan.

[CA3kids]

It's good to know these fees are in the ballpark. One more lawyer to go and then we move to the next step - saving up that retainer fee!

As for filling out the paperwork ourselves, I only mentioned that because (and I know I left this out originally) we have made and provided every lawyer we have been to with a detailed spreadsheet listing our credit card balances, minimum payments, interest rates, as well as all our other monthly expenses and net and gross incomes. So I thought they could just use what we have already put together.

I am learning not to trust anyone else to take care of this for me, though, as it sounds like some lawyers sometimes mess up and don't put all your info. on the forms anyway, so proofreading is gonna be essential.

Now that we've decided to do this I just want to get it over with, guess I'm getting impatient.

[sarakay5]

We are in IL and our total lawyers fees were $3500. We paid $50 + $274 up front for filing fees in addition to this. For a retainer we paid the lawyer $1.00.
Our plan included $3499 in lawyer costs. I thought this was strange but was told our trustee didn't like to see large payments to lawyers when creditors were recieving nothing.

[spell]

Under the old law, legal fees used to be #1 for repayment.
Now things are changed a little bit, they're still up high, but put in priority a little bit behind secured claims.

Some attorneys, will file a ch13 and put most if not all of their fees into the plan. Others hedge their bets and split the difference.
Plans that have a high probability of default, like a foreclosure save, most of the fees will be due before filing.

[stopthebleeding]

My lawyer just took 2500 in so cal.

Supposed to be all that it will take unless there are special cicustances but if all goes well that is it . I owe 72,000k. No house. No assests.

[CA3kids]

$1100 up front, rest in payment plan

Just an update - Hubby met with another lawyer today, much more reasonable than #2 - $1100 upfront, rest of fee in payment plan, explained that fees will be at state allowed rate (hubby didn't get exact details, part of why we are in this fix, but that's another story!)

In any case, saving up $1100 to start with is much more manageable than $2000 before he will talk to us in depth, plus $1000 more to file!

This lawyer also said we can file sooner than the #2 said, I think because #2 is too busy cranking out bks to work faster for us! Although this is all frightening, I am beginning to believe we can actually start this process which is now a relief as we are not paying our cards for the first time on the 15th.

I definitely agree with the advice given by others here on this forum to check out several lawyers through free consultations. Thanks to everyone for the great advice.