A Chapter 13 Bankruptcy requires that you put together a “plan” that determines how various creditors or interested parties will be treated. In this plan the client pays a trustee who is appointed by the Court. The Trustee then distributes the money according to your plan. One of the main benefits of Chapter 13 Bankruptcy is that it allows you to put your attorney fees inside of the Bankruptcy. In the Eastern District of Texas and Northern District of Texas Division (most of all the DFW metroplex) the Court mandates the standard fee at $3500. This $3500 excludes the Court filing fee for the case of $310.
Attorneys will vary the amount that they take “up front” for a Chapter 13 Bankruptcy. You may see advertisements for $0 down or very little down for a Bankruptcy case. Other attorneys might want to file the case for $1,000 to $1500 down. Every attorney is different — but most will probably just get as much as they think they can get out of you up front. Keep in mind that the $0 down advertisements can be slightly misleading because you would still be responsible for the filing fee to the Court of $310 and the cost for the attorney to pull your credit (generally anywhere from $30 to $50).
When the client hires the attorney the attorney should put any “attorney fee” portion in their trust account pending confirmation of the Bankruptcy case (confirmation generally takes 3 to 4 months).
— Example: Client gives attorney $1,000. The filing fee for the 13 is $310 and the cost for the credit report was $50. Attorney should deposit approximately $640 into his lawyer trust account (not his business operating account) pending confirmation of the case. After confirmation the attorney can transfer the attorney fee portion ($640) info their operating account.
Generally after the case is confirmed, the Chapter 13 trustee would distribute any remaining balance of the $3500 attorney fee directly to the attorney without any future payments made directly from the client to the attorney.
What this means for the general person interested in a Chapter 13 Bankruptcy:
— You can get a Chapter 13 filed for a relatively small amount down
— You can get a variety of attorneys for the same $3500
Why you should use Collins & Arnove if you are considering a Chapter 13?
— We charge very little up front ($500 generally). We don’t care about charging more up front because we have to hold the money in a trust account anyway. Plus we want our clients to feel our interest are completely aligned (getting the case confirmed).
— For the $3500 you get a Board Certified Attorney who works on your case (we don’t hand you off to a paralegal and we don’t hire “coverage” attorneys to do your hearings. Read more about being Board Certified here Read more about hiring a Bankruptcy Mill here