Attorney Fee not dischargeable in BK

[spearmint]

I just retained an attorney to help me with an issue but in looking at the retainer it says "attorney's fees will not be dischargeable in bankruptcy". I didn't know they could do that. Is this true? It is not an issue but it struck me as very odd.

[Road2Freedom]

Why would they help you file BK if you could just stiff them in the end? They will want to see the retainer early on and want to be PIF before they file.

[spearmint]

Now, I did not say I hired them to help with bankruptcy because I didn't. It was about another issue. I simply asked this because I have never seen this statement on a retainer before. I am considering filing BK but who knows when. It most likely will be a year or two at least.

[Road2Freedom]

Ah... silly me thinking it was BK fees. Sounds like a pretty smart attorney to me then. You should hire him.

[spearmint]

That's not what I asked either.

[HHM]

It is not true.

Many form contracts contain such language, but you cannot "waive" your right to file BK and the contract cannot make a debt that would be dischargeable under the BK code suddenly dischargeable.

Now, depending on how the fee is structured, the attorney fee may not be a debt. For example, many firms will have you pay a "retainer". The services are then billed against that retainer (automatically). So, when you get your bill, you are not paying for services rendered (i.e. a debt), you are asked to "replenish the retainer" to continue services in the future. In that scenario, you never incur a "debt" to the attorney unless the services rendered in a given month exceed the retainer on deposit.

[frogger]

Why do you think that Chapter 7 filers pay in full and up front?

[spearmint]

It is not true.

Many form contracts contain such language, but you cannot "waive" your right to file BK and the contract cannot make a debt that would be dischargeable under the BK code suddenly dischargeable.

Now, depending on how the fee is structured, the attorney fee may not be a debt. For example, many firms will have you pay a "retainer". The services are then billed against that retainer (automatically). So, when you get your bill, you are not paying for services rendered (i.e. a debt), you are asked to "replenish the retainer" to continue services in the future. In that scenario, you never incur a "debt" to the attorney unless the services rendered in a given month exceed the retainer on deposit.

Yes, that is exactly how it is worded - talks about replenishing the retainer. I paid a small retainer and they said they would invoice me monthly. I don't understand, though, why an attorney would put this language in the retainer agreement when it is not enforceable.

Are you saying that even though they invoice me and my payment replenishes the retainer that it could still be dischargeable?

It's only a small case anyway so it is a moot point but reading this worried me. It is always good to know where we stand.

[HHM]

Reason: most attorneys that don't work in BK don't understand BK. Don't worry about it.

[spearmint]

Reason: most attorneys that don't work in BK don't understand BK. Don't worry about it.

Thank you very much for your help

[btbeme]

Reason: most attorneys that don't work in BK don't understand BK. Don't worry about it.

Which is scary, judging from all of them coming out of the woodwork to "assist" the deluge of filers.