A fee agreement that purports to attach an attorney’s lien on the debtor’s exempt personal property is unenforceable under section 526(a) where state law allows such liens only on non-exempt property or on exempt personal property for specified exceptions not including attorney’s fees. In re Turner, No. 22-41570 (Bankr. D. Minn. Dec. 2, 2022). Read More
Tag Archive: Attorney Fees
-
Post-Petition Fee Agreement a No-Go
Posted by NCBRC - December 7th, 2022
-
Bifurcated Fee Agreement Violates Rules
Posted by NCBRC - October 24th, 2022
A prepetition fee agreement where the debtor agreed to have the law firm pay the filing fee postpetition at which time the debtor would reimburse the firm, was unenforceable in that it was predicated on ignoring Bankruptcy Rule 1006(a) which requires the fee to be paid when the petition is filed. In re Digregorio, No. 21-79 (Bankr. M.D. Fla. Oct 19, 2022). Read More
-
Bifurcated Chapter 7 Fee Agreement Void
Posted by NCBRC - June 3rd, 2022
A fee arrangement bifurcating the chapter 7 bankruptcy attorney’s representation into separate pre-petition and post-petition agreements violated sections 526 and 528 and was void. In re Siegle, No. 21-42321 (Bankr. D. Minn. May 19, 2022).
The chapter 7 debtor’s counsel used a bifurcated fee system under which he offered a pre-petition fee agreement which obligated him only to file the bankruptcy petition. After that, the agreement specified that the debtor had three options: “(1) complete the case pro se; (2) hire another bankruptcy attorney; or (3) execute the Post-Petition Agreement.” The agreement came to the court’s attention when the debtor entered into the post-petition agreement and her attorney filed for court approval. Read More
-
Bankruptcy Court Empowered to Award Appellate Attorney’s Fees
Posted by NCBRC - June 1st, 2022
A “bankruptcy court’s traditional power to impose contempt sanctions carries with it the authority to award damages and attorneys’ fees – including appellate attorneys’ fees.” Law Offices of Francis J. O’Reilly, Esq. v. Selene Finance L.P. (In re DiBattista), No. 20-4067 (2d Cir. May 17, 2022).
After the debtor received his chapter 7 discharge, his mortgagee, Selene, continued to hound him for mortgage payments. The debtor’s bankruptcy attorney, O’Reilly, moved to reopen the debtor’s bankruptcy in order to seek contempt sanctions against Selene for violation of the discharge injunction. The bankruptcy court granted the motions and sanctioned Selene in the amount of $9,046.60 in legal fees and expenses, and $17,500.00 in damages. Selene appealed to the district court which affirmed but noted discrepancies in the bankruptcy court’s description of the damage award. Read More
-
Debtor Not Entitled to Attorney Fees Under State Statute for Alleged Bankruptcy Misconduct
Posted by NCBRC - January 19th, 2022
The debtor was not entitled to an award of attorney fees under a state fee-shifting provision when she prevailed on her opposition to the creditor’s time-barred claims where the bankruptcy litigation was not connected to the substance of the claims but was a procedural issue dependent on misconduct of parties or attorneys and, therefore, federal law was controlling. LVNV Funding, LLC v. Andrade-Garcia, No. 21-1115 (B.A.P. 9th Cir. Jan. 11, 2022). Read More
-
Debtor Entitled to Attorney Fees from Defense of Motion for Relief from Stay
Posted by NCBRC - December 20th, 2021
The chapter 13 debtor was entitled, under Oregon’s reciprocal fee statute, to recover attorney fees for successfully defending a motion for relief from stay where the motion required interpretation of the terms of the motor vehicle lease. In re Gilgan, 2021 WL 4047463 (Bankr. D. Or. Sept. 3, 2021) (case no. 19-32009). Read More
-
Attorney Cannot Enforce Lien Based on Improper Fees
Posted by NCBRC - October 11th, 2021
A state default judgment lien was avoidable in bankruptcy under the court’s inherent power to police attorney conduct where the lien was security for unpaid attorney fees which were unreasonable. Moore v. Sanchez (In re Sanchez), No. 20-1267 (D. N.M. Sept. 22, 2021).
The debtor hired the creditor, Moore, to represent him in his divorce case. The case went two months without a fee agreement, then Moore presented the debtor with a bill for fees and costs in the amount of $15,000. The debtor paid him $7,000 and they reached a compromise as to the remaining portion of the bill. They entered into a retainer agreement providing for a 2% monthly interest rate on unpaid fees and an automatic lien on the debtor’s personal and real property as security. In January, 2011, Moore sued the debtor in state court to collect unpaid fees. The court awarded Moore a default judgment of $18,732.64 at 24% interest per year. By February, 2018, the debt had grown to $50,073.90, and Moore moved for foreclosure on the debtor’s home. The debtor filed for chapter 7 bankruptcy. In his petition, the debtor valued the house at $55,300.00 and claimed it as fully exempt. He also listed the debt to Moore as secured and disputed. He moved to avoid the judicial lien against his exempt property. Read More
-
Panel Affirms Reduced Attorney Fees
Posted by NCBRC - September 15th, 2021
The bankruptcy court did not abuse its discretion in reducing the chapter 7 bankruptcy attorney’s fees in two cases in which the attorney charged an additional $500 to clients due solely to their electing to pay his fees post-petition rather than up front. Ridings v. Cassamatta (In re Allen), No. 20-6023 (B.A.P. 8th Cir. June 21, 2021).
At issue in this case was Bankruptcy Attorney William Riding’s payment policy under which he offered two options for his chapter 7 clients. Under the first option, the debtor pays $1,500 prior to filing the petition. That amount comprises a $335 filing fee plus attorney fees of $1,165. Under the second option, the debtor pays nothing up front but pays $2,000 post-petition. That amount comprises the filing fee plus $1,665 in attorney fees. The services Mr. Ridings provided were the same regardless of whether the client paid up front or post-petition. Read More
-
Standing Trustee Need Not Disgorge Fees when Plan Dismissed Prior to Confirmation
Posted by NCBRC - August 11th, 2021
“[A] standing trustee is entitled to collect the statutory fee under [28 U.S.C.] § 586(e) upon receipt of each payment under the plan and is not required to disgorge the fee if the case is dismissed prior to confirmation.” McCallister v. Harmon, No. 20-1168 (B.A.P. 9th Cir. July 20, 2021) (unpublished).
The debtors made several payments in accordance with their proposed plan but voluntarily dismissed their bankruptcy prior to plan confirmation. The bankruptcy court’s order of dismissal included provision for the debtors’ attorney to collect his fee from the funds held by the trustee. The original order also provided for the trustee to retain the statutory fees she collected under section 586(e). Upon reconsideration of that order, though, the bankruptcy court concluded that section 1326(a)(2), which requires the trustee to retain plan payments until confirmation and return those payments to the debtor after deducting unpaid administrative claims if the case is dismissed prior to confirmation, mandated that the trustee return the fees to the debtor upon dismissal. In re Harmon, No. 19-01424-TLM, 2020 WL 6037759 (Bankr. D. Idaho June 23, 2020). Read More
-
Attorney Fees Intended To Pressure Debtor Unnecessary
Posted by NCBRC - May 27th, 2021
The creditor’s attorney fees attributable to its repeated motions to continue foreclosure proceedings during the debtor’s pending bankruptcy cases were unnecessary given that the automatic stay was in place, and the bankruptcy court deducted those fees from the allowed claim. In re Peta, 2021 WL 608233 (Bankr. E.D. Pa., Feb. 10, 2021) (case no. 2:19-bk-13264). Read More
-
Request Assistance
Request assistance with a case.
-
Help NCBRC
NCBRC needs your support to protect the rights of consumer bankruptcy debtors. The most effective way to support NCBRC is with a direct donation.
There are many other ways to give to NRBRC:
iGive.com: When you purchase items at over 1,400 online stores, a percentage of your purchase will be donated to NCBRC. Stores include Macy’s, Melissa and Doug, Bed Bath & Beyond, Nike, Petsmart, and more. Shop and Give today!
-
Keep up with NCBRC
Thank you!
Thank you to the following organizations without whose support our work would not be possible.
American College of Bankruptcy
The American College of Bankruptcy is an honorary public service association of bankruptcy and insolvency professionals who are invited to join as Fellows based on a proven record of the highest standards of professionalism plus service to the profession and their communities. Together with its affiliated Foundation, the College is the largest financial supporter of bankruptcy and insolvency-related pro bono legal service programs in the United States.NACBA
Visit NACBA.org
The only national organization dedicated to serving the needs of consumer bankruptcy attorneys and protecting the rights of consumer debtors in bankruptcy. Formed in 1992, NACBA has more than 3,000 members located in all 50 states and Puerto Rico.