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Why Bankruptcy Attorneys Cannot Accept Monthly Payments for Their Fees

June 17, 2014
by BurtonLawOffices
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If you are overwhelmed with debt and need to file for bankruptcy, you may become even more overwhelmed when you realize you need the help of an attorney but believe you do not have the funds to pay your legal fees. U.S. News and World Report estimates that nearly one million people who need to file for bankruptcy cannot afford the required legal costs and fees.

It is illegal for an attorney to accept fees after filing the Chapter 7 bankruptcy petition

Your search for an attorney willing to accept monthly payments may make you feel like a dog chasing its tail. The dog will never catch its tail and you will not find an attorney that can accept legal fees in installments to be paid after the filing of your Chapter 7 bankruptcy petition. Attorneys are not being cantankerous. It is simply illegal for them to collect money from you after your Chapter 7 bankruptcy petition is filed.

It works like a round robin. The legal fees for filing for bankruptcy are considered a pre-bankruptcy debt that is included in the bankruptcy proceedings. When the debts are discharged at the end of the bankruptcy, the legal fees owed to your bankruptcy attorney are also discharged.

A bankruptcy attorney may allow you to set up an installment plan to pay the legal fees for a Chapter 7 bankruptcy while the lawyer is preparing the petition and schedules. You will still need to pay the pay the entire fee prior to the date your petition is filed with the Bankruptcy Court.

Paying attorney fees in installments in Chapter 13

In a Chapter 13 bankruptcy, where the debts are restructured and a portion of the debts are paid on an installment plan with monthly payments made to the bankruptcy trustee, you may be able to include your attorney fees in your repayment plan. Repayment plans generally last from three to five years and the court and attorney have to both agree to allow this.

Discuss options with your attorney

A bankruptcy attorney will discuss with you all of your options and advise you on the best way to proceed.

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Steve Burton Stephen Burton has served as an attorney for bankruptcy trustees, taught bankruptcy at the National Business Institute and practiced before the bankruptcy courts. He regularly attends continuing education classes. As a consequence, virtually every case he files is successful. Read More...
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