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Reasonable Attorneys Fees For Chapter 7 Is Subject Of Bankruptcy Court Order

By Jonathan Alper

I have rarely discussed bankruptcy attorneys fees in this blog even though I know that fees are an important consideration for readers who are considering filing bankruptcy. I do not want this blog to be interpreted as an advertisement for my own fees in relation to those charged by other attorneys. However,  I recently read two general discussions about bankruptcy attorneys fees which should be very helpful to prospective bankruptcy debtors, and therefore, warrant discussion.

First, I saw a blog post by North Carolina attorney Susanne Robicsek titled, ?How Much Does It Cost To File Bankruptcy?? Her article is an excellent guide to comparison of bankruptcy fees charged by different attorney attorneys in your geographical area. Ms. Robicsek explains clearly why an attorney may charge more or less for your bankruptcy than others, and why some bankruptcy attorneys charge higher fees than other attorneys. She also discusses the alternative of do-it-yourself bankruptcy petitions to save money.

Those considering Chapter 7 bankruptcy would be most interested in a recent Memorandum Opinion issued by a bankruptcy judge in the Orlando Division which order  presents an accurate overview of the bankruptcy fee market in central Florida. (Case No. 6: 10-bk-12174). The court found that most bankruptcy attorneys charge in the range of $1,250 to $2,500 for a typical chapter 7 case plus filing fees and other costs. For these fees, the court noted, attorneys will spend some time with the client but the attorney delegates to their paralegal most of the client contact, pleadings, and detailed follow-up work. The court stated that an experienced and well-trained bankruptcy paralegal is capable of handling the much of the work involved in a standard chapter 7 case.

Some attorneys provide a more personalized service for higher fees. The bankruptcy judge stated that attorneys providing a ?luxury? bankruptcy service do most of the work themselves and more available to ?hold the hand? of their clients throughout the process. The court found that $3,600 was a reasonable fee  for the luxury service provided in this particular case, although the reasonableness of luxury fees depends on each attorney-client relationship.

Finally, the U.S. Trustee office asked the judge to set a ceiling on Chapter 7 legal fees in the Orlando Division. The judge declined to cap attorneys fees stating the a bankruptcy court should not interfere with market forces, and that some debtors want to pay high fees for a more personalized service.

Full post as published by Florida Bankruptcy Law on March 22, 2011 (boomark / email).