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Bankruptcy Basics: Your Bankruptcy Attorney Fee Depends on Accuracy, Honesty!

By Karen Oakes, Southern Oregon Bankruptcy Attorney

In “How Much Will A Bankruptcy Cost Me?“ I discussed the Teresa Guidici Chapter 7 bankruptcy filing.  Mrs. Guidici appears on a reality television show on the Bravo network, “Real Housewives of New Jersey”.   Mrs. Guidici and her husband have serious issues facing them about the accuracy of the schedules filed with the Court.  Another Bravo star, Sonja Morgan, who appears in a second reality show, “Real Housewives of New York City“, has also now filed for bankruptcy protection.   Mrs. Morgan’s bankruptcy filing is very different from Mrs. Guidici’s in at least three ways:  (1) the chapter under which the filing was made; (2) the attorney fees paid; and (3) disclosures on the bankruptcy papers.   A Chapter 11 bankruptcy is usually thought of as a “big business” bankruptcy and it can be difficult to even find an attorney willing to file a Chapter 11 for a consumer.  In the past, companies like United, UPS, have filed for Chapter 11 bankruptcy protection, a way to reorganize debts without necessarily dissolving the company or wiping out all debts (similar to a chapter 13).   (Interestingly, another reality show couple, of Real Housewives of DC, the Salahis, filed for chapter 7 protection for their vineyard within the past year.)

Mrs. Morgan wisely chose to file her case under chapter 11 of the Bankruptcy Code, claiming over $19 million in debts and $26,000 per month in income.     The retainer for a Chapter 7 case typically ranges from $700 up to $4500, depending on the area of the country and the complexity of the case.    A typical Chapter 11 retainer is in excess of $20,000.00 as the case is far more complex.

Mrs. Guidici’s schedules reported her inital attorney fees as less than $3000.    However, those fees have no doubt increased due to the involvement of the US Trustee and the Chapter 7 Trustee’s discovery of unrevealed assets.   Mrs. Morgan, while filing a Chapter 11, will probably pay her attorney less than Mrs. Guidici as she chose a different path for protection and her schedules appear to be more accurate.    Mrs. Guidici is headed for serious litigation while no objections have “yet” been filed in Mrs. Morgan’s case.   Non-accuracy leads to significantly increased attorney fees.

Honesty goes hand-in-hand with accuracy.   A debtor who does not carefully and thoroughly review the bankruptcy schedules, which are signed under penalty of perjury, can find themselves trying to explain the inaccuracy to a judge, who has the authority to deny discharge.

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Full post as published by Bankruptcy Law Network on November 23, 2010 (boomark / email).