Bankruptcy Attorney Fees and Fee Agreements

How do bankruptcy attorney fees actually work?

Bankruptcy fees are set by agreement between you and the lawyer, but federal law layers three checks on top of that agreement. First, a written contract explaining the services and the fees must be executed before your petition is filed (11 U.S.C. § 528). Second, your attorney must file a statement with the court disclosing the compensation paid or agreed to be paid within the year before filing, and the source of that payment (11 U.S.C. § 329). Third, if the compensation exceeds the reasonable value of the services, the court may cancel the agreement or order the excess returned (11 U.S.C. § 329). The Senate report behind § 329 explains the reason plainly: payments to a debtor's attorney carry serious potential for overreaching and should be subject to careful scrutiny. So the fee is not purely a private deal. It is a disclosed, reviewable number in a public case file.

• Written contract before filing, explaining services and fees clearly and conspicuously (§ 528)
• Disclosure statement filed with the court showing the amount and the source (§ 329)
• Court authority to cancel or claw back a fee that exceeds the reasonable value of the work

What changes the answer for your case?

Three things move the number most. The chapter you file matters: Chapter 7 is a shorter proceeding, while Chapter 13 runs for years and involves a plan, a trustee, and ongoing hearings, so districts commonly recognize a much larger fee for it. Complexity matters next. Court guidance on reasonable compensation directs judges to weigh the time spent, the rates charged, whether the services were necessary, how complex the problem was, and what comparably skilled practitioners charge (11 U.S.C. § 330). Some districts price that complexity item by item, adding separate amounts for a business, for real property with liens, for tax claims, or for lien-avoidance motions (CANB official material — Guidelines for Payment of Attorney's Fees in Chapter 13 Cases). Finally, scope matters. Adversary proceedings, appeals, and Trustee audits are frequently excluded from the base fee and negotiated separately (D. Md. LBR Appendix F).

What does federal law say about bankruptcy attorney fees?

Four provisions do most of the work. Section 528 requires a debt relief agency, which includes an attorney providing bankruptcy assistance to an assisted person, to execute a written contract explaining the services and the fees and terms of payment no later than five business days after services begin and before the petition is filed, and to give you a copy of the fully executed contract. Section 329 requires the compensation disclosure and gives the court power to cancel an excessive agreement or order a refund. Section 330 lists the factors a court weighs in deciding what is reasonable, and specifically allows reasonable compensation to an individual debtor's attorney in Chapter 13 based on the benefit and necessity of the services. Section 527 requires a written notice telling you that you can represent yourself, hire an attorney, or in some places use a petition preparer, and that the law requires a written contract specifying what will be done and how much it will cost.

• 11 U.S.C. § 528 — written contract, clearly and conspicuously stating services, fees, and payment terms
• 11 U.S.C. § 329 — disclosure of compensation and the court's power to cancel or order return of an excessive fee
• 11 U.S.C. § 330 — the reasonableness factors, including time, rates, necessity, complexity, and customary charges
• 11 U.S.C. § 527 — the notice telling you to ask to see the contract before you hire anyone

Where do state and local court rules differ?

This is where the practical numbers live, and they are set district by district rather than by state law. Many bankruptcy courts publish a presumptively reasonable Chapter 13 fee, often called a no-look fee, that counsel can be paid without filing detailed time records if no one objects. The Northern District of Indiana presumes $4,000 is reasonable in a routine consumer Chapter 13 (N.D. Ind. L.B.R. B-2016-1). The District of Columbia presumes $6,750, or $7,750 where a business is involved (D.C. LBR 2016-2). The Middle District of Florida publishes $4,500 (Bankr. M.D. Fla. Procedure Manual — Presumptively Reasonable Attorney Fees in Chapter 13 Cases). Arizona sets $4,500 for non-business and $5,500 for business cases (Ariz. LBR 2084-3). Because those figures change and every district differs, check your own court, which you can find through our court finder rather than assuming a neighboring district's number applies.

Can you pay a bankruptcy attorney over time?

The two chapters work very differently here, and the difference surprises people. In Chapter 7, the discharge wipes out debts that existed before filing, so a promise to pay your lawyer for pre-filing work is itself a dischargeable debt. That is why Chapter 7 fees are commonly collected in full before the petition goes in. Some districts address post-petition payment arrangements directly: in Maryland, an attorney who agrees before filing to accept Chapter 7 fees after the petition date must move for court approval, explain what prevented full pre-petition payment, and certify the client's informed written consent, and the arrangement is enforceable only if and to the extent the court approves it (D. Md. LBR 2016-1). In Chapter 13, much of the fee is customarily paid through the plan over time, with the trustee disbursing it after confirmation (D. Colo. L.B.R. 2016-3).

• Chapter 7: fees are commonly paid before filing; post-petition arrangements may require court approval in some districts
• Chapter 13: a retainer plus the balance paid through the confirmed plan is the ordinary structure
• So-called no money down offers are usually Chapter 13 cases where the fee is paid through the plan, not free representation

What is a no-look fee, and what does it buy?

A no-look fee is a district's published amount that is presumed reasonable, so counsel can be paid without filing itemized time records unless someone objects. It is a presumption, not a cap and not a floor. Courts that publish one are explicit about this: the D.C. rule states the court may hold a hearing on request of the debtor, trustee, creditor, or any party in interest and may reduce, increase, or otherwise modify the fee, and prohibits attorneys from telling clients the court requires any minimum or maximum compensation. What the fee buys is defined too. Arizona lists the minimum required services for a flat fee, including preparing and filing the petition, schedules, and plan, appearing at the meeting of creditors, reviewing claims, and assisting the debtor to obtain a discharge (Ariz. LBR 2084-3). Idaho requires attorneys electing the presumptive fee to sign a court model retention agreement (Bankr. D. Idaho LBR 2016-2).

• Presumed reasonable, still reviewable — the court can reduce, increase, or modify it
• Buys a defined list of services, typically through confirmation and on to discharge
• Extraordinary or unanticipated work generally requires a separate application with supporting time records

What documents and disclosures are involved?

You should expect a small stack of paper, and each piece has a job. The written fee contract required by § 528 states the services and the fees and payment terms, and you are entitled to a copy of the fully executed version. The § 527 notice explains your options and tells you to ask to see the contract before hiring anyone. Your attorney files a disclosure of compensation with the court under § 329 showing what was paid or promised and the source. Several districts require the fee agreement itself to be attached to that disclosure (Bankr. N.D. Ill. LBR 2016-1; Bankr. D. Idaho LBR 2016-1), and require a supplemental statement when the arrangement changes or a previously undisclosed payment is received (Bankr. D.S.D. R. 2016-1). Many Chapter 13 districts also use a signed rights and responsibilities agreement between debtors and their attorneys (CANB official material — Rights and Responsibilities).

• Written fee contract, executed and copied to you before filing
• The § 527 written notice about your representation options
• Disclosure of compensation filed with the court, often with the fee agreement attached
• Supplemental disclosure whenever the fee arrangement changes
• In many Chapter 13 districts, a signed rights and responsibilities agreement

What should you ask a bankruptcy lawyer about fees?

Ask for the written contract early and read the scope section first, because scope is where surprises hide. Ask what is excluded: adversary proceedings, appeals, and Trustee audits are commonly carved out, and Oregon requires a limited-scope Chapter 7 agreement to describe in detail every service the attorney will perform and to have the client acknowledge in writing the duties they will handle alone (D. Or. LBR 9010-1). Ask how and when the fee is paid, and in Chapter 13 how much comes through the plan. Ask whether the attorney is electing your district's presumptive fee and what services that includes. Ask what happens if the case is dismissed before confirmation, since some districts require a detailed application in that situation (Bankr. D. Idaho LBR 2016-2). Ask whether any fee is shared with another firm, which must be disclosed.

• What exactly is included, and what is excluded and priced separately?
• Is any portion paid through a Chapter 13 plan, and when does the trustee disburse it?
• Are you electing the district's presumptively reasonable fee, and what services does it cover?
• What happens to the fee if my case is dismissed or converted?
• Will you remain my attorney of record for all matters in the case?

Frequently asked questions

How much does a bankruptcy lawyer cost?

There is no national price, and we do not publish a verified nationwide average. What is published are district-level presumptively reasonable Chapter 13 fees, which range widely in the rules we carry, from $4,000 in the Northern District of Indiana to $7,000 in the Central District of California for a non-business case. Chapter 7 fees are set by agreement and are not published this way.

Are attorney fees separate from the court filing fee?

Yes. The court's filing fee is $245 for a Chapter 7 case and $235 for a Chapter 13 case under 28 U.S.C. § 1930, plus a $78 administrative fee in either chapter and a $15 trustee surcharge in Chapter 7. Those go to the court, not your lawyer. Attorney fees are charged separately, and some districts allow the filing fee to be listed as a reimbursable expense.

Can the court make my lawyer give money back?

It can. Under 11 U.S.C. § 329, if the compensation exceeds the reasonable value of the services, the court may cancel the fee agreement or order the excessive portion returned, either to the bankruptcy estate or to whoever made the payment. Some districts also allow disgorgement where the attorney did not substantially perform the promised duties (Bankr. S.D. Ill. official guidance — Chapter 13 Procedures Manual).

What does no money down bankruptcy mean?

It generally describes a Chapter 13 case where little or nothing is collected up front and most of the attorney fee is paid through the confirmed plan by the trustee. It is a payment structure, not free representation. In Chapter 7 the arrangement is different, and in some districts a post-petition fee agreement is enforceable only if and to the extent the court approves it.

Can my attorney split the fee with another lawyer?

Fee sharing is restricted. Under 11 U.S.C. § 504, a person compensated under the estate provisions generally may not share that compensation, with limited exceptions for members of the same firm, for attorneys of petitioning creditors, and for bona fide public service attorney referral programs. Several districts require any fee-sharing agreement to be disclosed in the compensation statement (W.D. Mich. LBR 2016-1).

Does my attorney have to stay on the case after filing?

In many districts, yes. In the Eastern District of North Carolina an attorney who files a petition remains attorney of record for all purposes until the case closes or the court relieves them. Maryland goes further and provides that after the initial engagement the attorney may not demand payments from the debtor as a precondition to doing the work (D. Md. LBR Appendix F).

Can I pay my Chapter 13 attorney entirely through the plan?

That is common but not universal. In the Eastern District of California, except for pre-petition retainers, fees are paid through the plan unless the court orders otherwise. In Colorado, the presumptively reasonable fee is paid by the trustee upon confirmation to the extent funds remain after the trustee's fee. Your district's rule and your plan terms control the timing.

Sources

• 11 U.S.C. § 329 — Debtor's transactions with attorneys
• 11 U.S.C. § 528 — Requirements for debt relief agencies · official source
• 11 U.S.C. § 527 — Disclosures · official source
• 11 U.S.C. § 330 — Compensation of officers · official source
• 11 U.S.C. § 504 — Sharing of compensation
• 28 U.S.C. § 1930 — Bankruptcy fees · official source
• N.D. Ind. L.B.R. B-2016-1 — Presumptively Reasonable Attorney's Fees in Chapter 13 Cases
• D.C. LBR 2016-2 — Compensation for Debtor's Attorney in Chapter 13 Cases
• Bankr. M.D. Fla. Procedure Manual — Presumptively Reasonable Attorney Fees in Chapter 13 Cases
• Ariz. LBR 2084-3 — Attorney Fees
• U.S. Bankr. Ct. C.D. Cal., Appendix IV - Guidelines for Allowance of Attorneys' Fees In Chapter 13 Cases
• CANB official material — Guidelines for Payment of Attorney's Fees in Chapter 13 Cases
• CANB official material — Rights and Responsibilities
• D. Md. LBR 2016-1 — Compensation of Professionals
• D. Md. LBR Appendix F — Chapter 13 Debtor's Counsel Responsibilities and Fees
• D. Colo. L.B.R. 2016-3 — Compensation of Chapter 13 Debtor's Attorney
• Bankr. D. Idaho LBR 2016-1 — Debtor Representation And Compensation
• Bankr. D. Idaho LBR 2016-2 — Debtor Representation And Compensation In Chapter 13
• Bankr. N.D. Ill. LBR 2016-1 — Disclosure of Agreements Between Debtors and Their Attorneys
• Bankr. D.S.D. R. 2016-1 — Disclosure of Compensation
• W.D. Mich. LBR 2016-1 — Disclosure of Compensation Paid or Promised to Attorney or Bankruptcy Petition Preparer
• D. Or. LBR 9010-1 — Attorney — Notice of Appearance; Withdrawal
• E.D.N.C. LBR 9011-1 — Attorneys — Duties
• CAEB Form GL.Pmt_03 — Guidelines for Payment of Attorney's Fees in Chapter 13 Cases
• Bankr. S.D. Ill. official guidance — Chapter 13 Procedures Manual

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