QUESTION
Is it true that an attorney will not file your bankruptcy until you paid in full and is a retainer stop an impending garnishment?
Asked on Oct 07th, 2012 on Bankruptcy - Michigan
15 ANSWERS
General Practice Attorney serving Crystal Lake, IL
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Bruning & Associates, P.C.
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Attorneys frequently will not file a bankruptcy until they have received full payment from you. The reason is that the bankruptcy code does not give attorneys an exception; if you still owe money to the attorney after they file the bankruptcy case, then they actually become a creditor too! This can create a conflict of interest, and the attorney would be committing a discharge violation by attempting to collect from you. Some attorneys will separate their bills into "pre-petition" and "post-petition" work in order to facilitate payment plans for you, but it is not something I see very often. Another option may be filing a chapter 13 bankruptcy; while a more complex option, some attorneys will accept payments through the bankruptcy payment plan. This may or may not be feasible for you, though, depending on your circumstances.
Answered on Oct 12th, 2012 at 4:24 AM
Criminal Defense Attorney serving Deltona, FL
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R. Jason de Groot, P.A.
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Some attorneys take payments in chapter 13 bankruptcies. An attorney will usually not file a chapter 7 until paid in full because the debt can be discharged. There are other ways to stop a garnishment than filing bankruptcy.
Answered on Oct 10th, 2012 at 12:48 AM
Appellate Practice Attorney serving Cheyenne, WY
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Lynn Boak Attorney at Law
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It is true. The reason for this is that if you owe attorney's fees, the attorney will be in the position of being both your representative and a creditor, which is a conflict of interest for the attorney and prohibited by attorney codes of professional conduct.
Answered on Oct 10th, 2012 at 12:48 AM
Bankruptcy Law Attorney serving Austin, TX
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Law Office of Susan G. Taylor
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The attorney is only another unsecured creditor after filing, so most will not file until paid in full.
Answered on Oct 09th, 2012 at 9:08 PM
Attorneys always require payment in full before filing a Chapter 7 bankruptcy. Failure to do so would result in the attorney having to list himself as a creditor and then discharge the debt owed to him. Chapter 13s are often filed after the payment of a retainer, and before payment in full. Debtor's remaining attorney's fees can be included in the debtor's monthly plan payments. Chapter 11s are typically filed after the payment of a retainer, with all further fees being paid after Application to the Court and entry of an order approving these fees and costs. Paying an Attorney a retainer does not stop a wage garnishment. Only the actual filing of a bankruptcy case stops a wage garnishment.
Answered on Oct 09th, 2012 at 8:55 PM
It depends on what the retainer agreement provides. There are two parties to the retainer agreement, the attorney & the client. Both must reach an agreement for the legal work to take place, and no agreement, no legal work. In Chapter 7, it is customary to require payment in full before filing because the court holds that it is a conflict of interest to owe money to your bankruptcy attorney and the balance of the fee is uncollectable. Who can afford to work for free? In Chapter 13, it is customary for the larger part of the legal fee to be paid out of the money that is paid to the bankruptcy trustee. if the Plan fails, the attorney does not collect their fee.
Answered on Oct 09th, 2012 at 8:55 PM
Yes, in Chapter 7 bankruptcy, NOBODY, including your attorney, can ask you to pay debts incurred prior to the bankruptcy when the debt is dischargable - which attorney fees generally are. An attorney would be an absolute fool or absolutely gratuitous to file a bankruptcy without being first paid!
Answered on Oct 09th, 2012 at 8:43 PM
It is common for attorneys charge a retainer in the full amount for a chapter 7 bankruptcy. Not true for Chapter 13. In Chapter 13, the attorney files an application with the court for payment. An attorney would probably not get paid if credit was offered for a Chapter 7.
Answered on Oct 09th, 2012 at 8:40 PM
Bankruptcy Attorney serving Myrtle Beach, SC
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Law Office of Margaret L. Evans, PC
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Question: It is true that an attorney will not file your bankruptcy until paid in full? *- yes, especially for a Chapter 7; with a Chapter 13, the attorney CAN (but doesn't HAVE to) accept part of his/her fee being paid through the Chapter 13 plan * Question Detail: Retainer will that stop an impending garnishment? *- partial retainer being paid will NOT stop a garnishment; you do NOT have the protection of the AUTOMATIC STAY until the second you actually file the BKY case.
Answered on Oct 09th, 2012 at 8:34 PM
Daniel James Wilson
Its not that we would not to file cases without being paid, its that it is unethical to do so. If I file a BK case before getting paid in full I become a creditor subject to the automatic stay.
Answered on Oct 09th, 2012 at 7:41 PM
Probate and Estate Planning Attorney serving Harrison, MI
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David T. McAndrew, Attorney at Law
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No, that's not true. It depends on the agreement that the debtor SIGNED specifying the financial terms of their representation. Most attorney's are quite clear on how much of their compensation must be deposited, (often full payment on a Chapter 7) before they will submit the client's case. Many attorney's accept terms, but again, they are well defined before they accept your case.
Answered on Oct 09th, 2012 at 1:04 PM
Bankruptcy Attorney serving Phoenix, AZ
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Law Office of D. L. Drain, P.A.
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If this is a chapter 7 - then yes. Otherwise the attorney becomes a creditor in his/her own client's bankruptcy. This is unethical. If you need a chapter 13 - then it depends on the attorney. But do your homework about bankruptcy and the attorney. Please understand that filing for bankruptcy is a very complicated process. It is wise to talk to an experienced bankruptcy attorney before deciding to take this important step. Most Arizona bankruptcy attorneys offer a free consultation about the basics of bankruptcy.
Answered on Oct 09th, 2012 at 1:01 PM
Bankruptcy Attorney serving Walnut Creek, CA
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Alan E. Ramos Law Offices
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It depends on which Chapter the bankruptcy is being filed under. An attorney must obtain payment in full before filing a Chapter 7. Any balance due upon filing becomes a general unsecured claim and will be discharged in the bankruptcy. Any agreement between an attorney and a client for payment of fees after the filing of a Chapter 7 is unenforceable and is prohibited in most jurisdictions. With regard to Chapter 13, it depends on which district, and in which division, the petition is filed. For instance, in the Oakland Division of the Northern District of California, the court has approved a "no-look" fee (a fee which does not require court approval) of $4,800.00 for a Chapter 13 ($6,000.00 for a business Chapter 13). The court also limits the amount that can be paid prior to filing to $2,000.00, with the balance of the fee to be paid in the plan. In Chapter 11, it is typical for an attorney to receive a retainer, the amount of which is directly related to the complexity of the case. Retainers can range from $10,000.00 to $150,000.00 or more.
Answered on Oct 09th, 2012 at 1:00 PM
3 Awards
Depends on the attorney and you retainer arrangement.
Answered on Oct 09th, 2012 at 12:59 PM
Different attorneys handle this in different ways. For your information, when you file bankruptcy an injunction kicks in (called the automatic stay) that makes it illegal for "any person" to do "any act" designed to collect a debt that existed at the time of filing. Arguably, this includes what you would owe your attorney if he allowed you to make payments.
Answered on Oct 09th, 2012 at 12:54 PM