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6151 Lakeside Dr.,  Suite 2100
Reno, NV  89511

Reno Bankruptcy Attorney

Stephen R. Harris, Esq.

Providing Financial Protection

for 46 Years

There is nothing easy about making the decision to file for bankruptcy. I welcome the opportunity to speak with you personally and confidentially to help you find the ideal solution to your financial challenges.

The Chapter 13 Bankruptcy Process

The Chapter 13 Bankruptcy Process

The steps for working your way through a Chapter 13 bankruptcy are pretty much the same in steps one through eight explained in a previous post. A Chapter 13 filing requires that you propose a plan to repay creditors over a period of 3 to 5 years. The trustee will oversee compliance with that plan. You must have a plan in place within 15 days after you file your petition and your first plan payment is due within 30 days of the petition filing.

The 341 Meeting

The 341 meeting for a Chapter 13 is very similar as in the case of the chapter 7, but the standing trustee will be more concerned with your income and expenses to see if your plan can reasonably be expected to succeed. The trustee and creditors may raise any questions, concerns or objections after submitting your plan to the court.

You and your lawyer may attempt to justify your plan and satisfy the questions. If you cannot satisfy the standing trustee or your creditors, you will have the opportunity to modify your plan and to schedule another hearing to have it approved. Occasionally, problems will be so severe or cannot be negotiated away that the court may consider the problem so serious they could dismiss your Chapter 13 bankruptcy case altogether. This is rare.

One of the places that tend to be stumbling blocks is the valuation that you place on assets that might be different from your creditor’s estimates. One of the issues that usually come up has to do with real property and the liens against it. Your attorney will probably attempt to strip off liens, depending upon the valuations of your real properties.   

Lien Stripping

Lien stripping and lien strip downs are an important component of the Chapter 13 process.  Many Chapter 13 debtors have a residence or a rental house that they are attempting to strip off any junior liens, and in the case of a rental house, strip down the value of the lien to the value of the collateral rental house.  Lien stripping would be as follows:

The debtor has a homestead residence which they own and reside in.  The residence is worth $100,000.00, but it has a first trust deed obligation of $125,000.00 and the second trust deed obligation of $75,000.00.  In this instance, the Debtor has the potential for filing a Chapter 13 Plan for 5 years where the second trust deed obligation would be stripped off the debtor’s residence, assuming the debtor completes its 5 year Plan of Reorganization and timely makes the payments. 

Again, assuming the debtor’s homesteaded residence is worth $100,000.00, if the Debtor has a first trust deed obligation of $95,000.00, and second trust deed of $75,000.00, in this instance, the Debtor would not be able strip off the second trust deed, since there is potentially $5,000.00 equity that inures to the benefit of the second trust deed holder.  Translated, any equity in a residence that the second trust deed holder may possess would prevent that lien from being stripped off by the debtor in a Chapter 13 Plan.  In the case of rental houses, not only can the debtor do a lien stripping, but it can also do a lien strip down. 

An example of this would be a debtor owns a rental house worth a $100,000.00, with a first trust deed obligation of $50,000.00 and a second trust deed obligation of $150,000.00.  In this example, the debtor can propose upon a Chapter 13 Plan where the second trust deed obligation is reduced from $150,000.00 to $50,000.00, which reflects that amount of equity after the first trust deed obligation is subtracted from the valuation of the house that inures to the benefit of the second trust deed obligation.  Therefore, after the debtor successfully completes the 5 year plan payment period, the second trust deed holder would be mandated to reduce its lien and would have a $50,000.00 of the lien paid off, and the remaining $100,000.00 would be discharged.

              2.           An example of lien stripping or lien strip downs are as follows: debtor resides in his homesteaded house that he owns, which house has a first trust deed against it for $100,000 and a second trust deed against it for a $200,000.  If the house is worth $90,000, then the debtor  is able to strip off the $200,000 second because there is no equity in favor of the second, thereby allowing the debtor in a Chapter 11 or Chapter 13 to strip off the entire amount owing on the second.  

If you are using the same debtor in the same homesteaded house that the debtor resides in, the house is worth $125,000, the debtor owes a first trust deed of $100,000 and the second trust deed of the $200,000, then the debtor would not be able to strip off any of the $200,000 second trust deed, because of reported $25,000 equity above and beyond what is owed to the first.   An important thing to remember in this situation is that the debtor is residing in the house and claims it as a homestead.  

Using the same lien values of $100,000 for the first trust deed and $200,000 for the second trust deed, and a house valued $125,000, if the debtor is not residing in the house and rents the house to third parties, then the debtor could strip down the value of the second lien from $200,000 to $25,000, by reason of the $25,000 equity in the rental above, beyond $100,000 owed on the first lien.  

In an extreme situation using a rental house, a debtor could have a house worth $125,000, owe $100,000 on the first, $200,000 on the second and $100,000 on the third.  In this factual situation, the debtor could reaffirm the $100,000  first lien, strip down the $200,000 second lien to $25,000, conditioned on paying that $25,000 residence value for a five-year period  in equally amortized monthly payments, unless the secured creditor consents otherwise, and to strip off the entire $100,000 third lien  obligation.  

If your lawyer is unable to negotiate the differences, then the bankruptcy judge will decide.

Repayment to Creditors

The other major difference between Chapter 13 and Chapter 7 cases is that Chapter 13 cases involve repayment to creditors, and the standing trustee may want to keep tabs on how you are doing. Each year you must file a statement with the court regarding your income and expenses for the past year. These reports will continue until the plan is fulfilled. You and your lawyer should set up the process for completing those reports annually. Also, you must file a copy of all tax returns that become due while your bankruptcy case is open.  Potentially if your annual income significantly increases, then your plan payments may increase.

Since several creditors may be receiving payments from your Chapter 13 plan, you want to be sure that the money you pay will go toward satisfying those debts. The document called a proof of claim should be filed by the creditors up to 90 days after the 341 meeting. This ensures that they will receive the money that you are paying toward your plan. If the creditor does not file the proof of claim, you should file same on their behalf, with one exception.

That one exception is government agencies. They have up 280 days to file a proof of claim which are called priority debts. These debts would not normally be discharged in Chapter 13, but if they fail to file a proof of claim they could be discharged. Hopefully, their claim may fall through the cracks and you might be lucky indeed

Summary

I know there is a lot of information here so my advice is to call our office at (775) 786-7600 or (775) 690-2190 anytime to set up a complimentary and confidential consultation with me at your earliest convenience. You can also visit our new business Facebook Page for more information.

The Chapter 7 Bankruptcy Processes You Should Know . . . Continued

The Chapter 7 Bankruptcy Processes You Should Know . . . Continued

This article will primarily deal with the processes involved with the filing of chapter 7 bankruptcy, sometimes called ‘consumer,’ or ‘personal’ bankruptcy and is a continuation from the article of the same name.

Step 7 – Notification of Creditors

About 7 days after the court receives your chapter 7 bankruptcy petition, it will notify all those creditors that you have listed on your filed pleadings that you have filed bankruptcy. The court will announce the case trustee and the date and time for the section 341 first meeting of creditors.

Step 8 – Supplying Copies of Your Federal Tax Returns

At least one week before the 341 meeting, you must supply copies of your most recent federal tax returns to the trustee and certain financial documentation, such as three months bank statements incurred prior to filing.

In chapter 13 cases, you must supply the standing trustee the last four years of your tax returns. If you fail to supply these tax returns, your case may be dismissed.

Therefore, it is important to file your tax returns prior to filing the bankruptcy.

Step 9 – Chapter 7 Bankruptcy 341 Meeting; First meeting of Creditors

Most petitioners dread the 341 meeting because they do not know what to expect. This fear is usually way overblown. Since these meetings are open to the public, we suggest that you attend a meeting for other positioners prior to attending your own. Since 341 meetings are little different between Chapter 7 and Chapter 13, be sure to attend the correct kind of filing meeting. This will give you a complete and accurate picture of what actually goes on at a 341 meeting and enables you to be thoroughly prepared for your own.

In Chapter 7 cases, seldom do any creditors show up at the meeting, although one or two might. They do have the right to ask questions, but this does not frequently happen. The 341 meetings are not emotional affairs. There are conducted to gather, clarify and affirm the statements that you made in your bankruptcy filing documents, with respect to assets and liabilities.

The 341 meeting usually takes place 30 to 40 days after you file. The trustee conducts the meeting, and you and your attorney must attend. Also bring proof of your Social Security number and a photo identification document, like a driver’s license.

Typically, the trustee will ask you if you have any nonexempt property that can be sold to pay off creditors. They may also ask about any payments or transfers you made in the two years preceding the bankruptcy. They will probably also ask about the value of your home, value of your car, any retirement plans, and other questions that meet the requirements of the state you live in.

They may also ask about nonexempt assets that you may want to keep, and if so, arrange for you to pay for them. If you do not want to keep nonexempt property, the trustee arranges to have those assets evaluated and picked up. They will then be sold for the benefit of creditors.

Your attorney will review 341 meeting questions with you before the meeting. An experienced attorney can usually anticipate any areas of uncertainty and will usually deal with those before the 341 meeting. In most chapter 7 cases there will be little or no nonexempt assets. Usually this is the end of 341 meetings. In about 60 to 90 days after the 341 meeting, the bankruptcy debts are discharged, assuming the debtor passed and file their post condition credit counseling certificate.

There are a few milestones and chapter 7 bankruptcy processes that you want to keep in mind:

  1. The trustee has 10 days after the 341 meeting to decide whether you passed or failed the Means test. If you fail, the trustee will ask the court to dismiss your case.
  2. The trustee and creditors have 30 days after the 341 meeting to object to any of your claims of exempt property. If you have amended exemption claims, the 30 day clock starts from the time of any amendments.
  3. Creditors have 60 days to object to the discharge of certain kinds of debt. If they don’t file objections, it’s too late for them to do it later, and you are over the last bankruptcy hurdle.

All these deadlines assume you have supplied accurate information and have answered questions accurately.

Section 341 first meeting of creditors are important for the debtor filing the petition,  in that they will have the opportunity to answer questions the bankruptcy trustee for their case might have with respect to the extent location and availability of assets to pay creditors’ claims, as well as information regarding the liabilities of the petitioner.  For creditors, some opportunity to ask questions of the petitioner with respect to his available assets and liabilities in the case as well as asking questions about inconsistencies found in the schedules of assets and liabilities, and statement of financial affairs filed by the debtor.  

Additionally, this section 341 first meeting of creditors date triggers the time for filing complaints objecting to discharge then go 90 days after the time first set the 341 meeting, as well as time for the debt of the bankruptcy trustee to object to the debtor’s claim of exemptions – 35 days from the date last set for the section 341 meeting.  Extended 341  first meeting of creditors are not encouraged  by the bankruptcy trustee and the debtor’s attorneys, especially if the question becomes too intense at the 341 meetings specific to a creditor’s particular issue  concerning the debtor.

After 15 to 60 minutes of questioning the chapter 7 bankruptcy trustee will more than likely suggest and/or recommend to the creditor or the creditor’s attorney asking the questions to notice  a rule 2004 examination in order to ask the debtor questions in a formal atmosphere with no time constraints.  Normally there are time constraints at a section 341 first meeting creditors because there are other scheduled debtors to give testimony and to answer questions to the bankruptcy trustee, normally anywhere from 3 to 8 cases every half hour.  

 Assets in Chapter 7 cases 

In a few Chapter 7 cases that have assets that need to be liquidated or distributed for creditors, the case will remain open until all those assets are dealt with. Sometimes, depending on the kind of assets, their disposal can take quite a long time, sometimes years. Once your case is filed the non-exempt assets are turned over to the trustee and those assets become property of the bankruptcy estate, and no longer yours to do what you want.

You must, of course, cooperate with the trustees to dispose of those non-exempt properties and assist with collecting any monies or properties that might be owed to you. You may have tax refunds that are outstanding at the close of bankruptcy, or outstanding real estate or personal notes that needs to be collected or sold to pay your creditors.

Those are the steps that you must go through to finalize your Chapter 7 bankruptcy case. Barring any foreseen complications, you should be done with your bankruptcy case in about 120 to 180 days after the 341 meeting.

I know there is a lot of information here so my advice is to call our office at (775) 786-7600 or (775) 690-2190 anytime to set up a complimentary and confidential consultation with me at your earliest convenience. You can also visit our new business Facebook Page for more information.

Bankruptcy for the Elderly: Beware of This Horrific Fact; 1 in 8 Filers Were Over 65 Years of Age.

Bankruptcy for the Elderly: Beware of This Horrific Fact; 1 in 8 Filers Were Over 65 Years of Age.

Senior-citizen bankruptcies are on the rise, driven by socioeconomic factors such as insufficient Social Security payments, higher health-care costs, and increased individual responsibility for retirement savings.

Between 2013 and 2016, 1 in 8 filers in the U.S. was age 65 or older; during the same time period, 21% were age 55 to 64, according to Robert Lawless, law professor at the University of Illinois’ College of Law who has co-authored research on the subject. There’s been an overall trend toward older filers since the study was first conducted in 1991, he says.

While some of the stigma of declaring bankruptcy has dissipated, there can still be negative consequences such as losing property and long-lasting effects on credit. Before filing, make sure you weigh your options and avoid these potentially costly mistakes:

  • Not sufficiently exploring self-help options
  • Haphazardly liquidating assets
  • Taking on additional financial obligations to pay the bills
  • Not seeking legal help

If you’re feeling in over your head, it’s advisable to consult an attorney. The Eldercare Locator connects older Americans and their caregivers with trustworthy local support resources, including legal help, based on their location. Seniors can also use the Legal Services Corp. website to locate nonprofit legal aid organizations in their state that may be able to help them navigate debt and bankruptcy-related issues.

The website of the National Association of Consumer Bankruptcy Attorneys is another resource seniors can use to locate an attorney in their area. For seniors who don’t qualify for legal aid, but are concerned about fees, there are a number of firms that will do pro-bono work and sometimes firms will offer reasonable and discounted payment plans.

Why Many Older Americans Are Going Into Debt?

Experts have observed a rapid surge of retirees getting into insurmountable debt. The skyrocketing figures are due to the following reasons:

  • Credit card debt
  • Medical expenses
  • Job loss
  • Reduced income
  • Expensive insurance co-pays

Many seniors also experience a lack of support, lack of access to necessities, and isolation. Filing in Nevada for bankruptcy offers a way to ease the burden of debt and get peace of mind in their golden years.

What Kind of Bankruptcy Can Seniors Qualify For?

Most older adults filing for bankruptcy will qualify for either Chapter 7 or Chapter 13 bankruptcy:

Chapter 7 Bankruptcy

This type of filing will allow seniors to discharge most or all their debts. Chapter 7 is usually granted to filers who make less than their state’s median income.

The court may also order a means test to determine if an elderly filer can pay a Chapter 13 plan. Under Chapter 7, the court trustee may ask the debtor to turn over any non-exempt assets. These assets will be sold to help pay the petitioner’s creditors.

Chapter 13 Bankruptcy

This type of filing involves a three-to-five-year repayment plan. Successful filers generally get to keep their property and assets.

Older adults who still have steady income may prefer this repayment plan, especially for those who do not pass the means test or make more than the state’s median income. The success of filing may depend on selecting the right type of bankruptcy to file for. Therefore, it is best for petitioners to seek the help of a bankruptcy lawyer in Raleigh for expert assistance on the next steps.

Seniors May Be Able to Keep Their Homes After Filing for Bankruptcy.

There is something called a homestead exemption when it comes to bankruptcy laws. It is a certain amount of home equity that’s protected under bankruptcy. However, some seniors may risk losing their homes, especially if they have large amounts of equity or unpaid mortgage.

It is critical to learn how much equity the debtor’s state protects under bankruptcy. Some cover the full value of the petitioner’s home under Chapter 7 in Nevada. On the other hand, older adults may keep their home under Chapter 13, provided they are able to continue paying the mortgage. The repayment plan can also help debtors pay mortgage arrears.

Learn More About Bankruptcy for the Elderly in Reno.

Bankruptcy can pave the way for a more secure retirement for debt-ridden older adults. It is natural to have many questions about the decision to file, especially when it involves factors like your social security income and retirement accounts. Call the Harris Law office today at 775-786-7600 for a free consultation, also visit our new Facebook Page for more information.

Chapter 7 Bankruptcy & Chapter 13 Bankruptcy Processes You Should Know

Chapter 7 Bankruptcy & Chapter 13 Bankruptcy Processes You Should Know

This post will primarily deal with Chapter 7 bankruptcy and 13 bankruptcies. Chapter 11 business reorganization bankruptcies are a different animal all to themselves. You will follow the steps below when you file for a personal or as it’s sometimes termed ‘consumer’ bankruptcy for debt relief.

STEP 1 – Assessing Your Case

In order for the attorney to be able to properly assess your case, an initial interview will gather the following information:

  • Copies of three years of your most recent tax returns.
  • The amount of income tax that you may owe.
  • The amount of domestic support obligations in any arrears.
  • What is your home worth and the balance owed on recorded mortgages and the amount of monthly installments that you are behind.
  • How much are your cars worth and the amount that you owe on them.
  • An approximate of balances that you owe on all your bills including credit cards.
  • A copy of pay stubs for the last 60 days.
  • Your home mortgage documents.
  • The certificate of title on any motor vehicles you on.
  • In court papers for lawsuits you are involved in.
  • Divorce, domestic support orders or marital settlement agreements.
  • Documents showing the amount of income from any sources.

STEP 2 – Finding Creditors

Begin finding your creditors. In most cases you know who you owe money to.  Remember, you only receive a discharge for those creditors you list in your bankruptcy schedules, notwithstanding the correctness of the amounts owed. You have outstanding invoices and bills which detail the amount of money owed, the account numbers and their contact addresses. In a few instances, you may be unsure of any outstanding balances. You want to be sure that there are not any old or forgotten debts.  Again, creditors you do not include on your bankruptcy documents will not be discharged.

Order credit reports from all three of the major credit reporting agencies. Some creditors may have not reported to all the agencies, and some are missed by others.

STEP 3 – Choosing an Experienced Attorney

Interview and decide on an experienced attorney. Now that you have all your information gathered, you can interview attorneys well-armed about your specific circumstances, and you will receive informed answers to your questions.

After deciding on an attorney, ask them for a worksheet of all information they are going to need. This will require you to gather as much information as possible. The answer to all these questions is going to wind up in the bankruptcy filing, so it is important to have accurate and timely information.

STEP 4 – Credit Counseling

Arrange for credit counseling. Ask your attorney for local recommendations. BARF or BAP requires you have a certificate from an approved credit counseling agency within 180 days of your petition filing for chapter 7 bankruptcy.

STEP 5 – The Questionnaire

Many law firms will give you a questionnaire to complete at home, click on the link for an example. Fortunately, you have already taken a big step toward completing this paperwork by gathering the data in Step One. It’s important to complete the questionnaire accurately. Remember this information is going to the bankruptcy court and it will be reviewed and even sometimes audited. Take your time.

Return your paperwork to your attorney and they will make up the official documents and pleadings from the questionnaires you have completed.  When they give you the draft, take it home and review it thoroughly and make any corrections before you return it to the attorney.

STEP 6 – Filing the Petition

Once all the documents are complete, you and your attorney assess your situation and will decide on the actual date to file the petition and pleadings with the court. There are several considerations that may come into play as to the filing, or petition date. For example, you may have recently lost your job. You may want to delay the filing so your average income for the last six months would be lower, thereby making it easier to pass the Means test. Your attorney will guide you to this decision.

Once you do file, the section §362(a) automatic stay kicks in. The stay simply means that creditors are forbidden to take any action against you. Collection calls and actions will stop immediately. It usually takes about 7 to 10 days for the courts to notify your creditors. If you receive collection calls, simply tell them you have filed for bankruptcy and they will receive their notice in the mail in a few days.

TO BE CONTINUED: Next Blog Post – Information about the automatic stay provision.

Chapter 7 Bankruptcy: What Other Personal Bankruptcies Are There?

Chapter 7 Bankruptcy: What Other Personal Bankruptcies Are There?

Depending on your individual circumstances, choosing which kind of bankruptcy to file can be very difficult. Let’s look at some of the factors that may help you make the right decision.

Chapter 7 Bankruptcy

Chapter 7 bankruptcy allows a person to keep all their exempt assets and discharge their debts. The trustee is appointed to gather all the nonexempt assets, sell those assets, and distribute them pro-rata to the creditors.

Chapter 7 bankruptcy may be your best choice under the following circumstances:

  • If all the property you have is exempt under both state and federal bankruptcy laws. In other words, you do not have assets that you will have to give up. Over 90% of all bankruptcy cases are this variety.
  • You are current on your home and automobile payments before filing for bankruptcy.
  • You are willing to give up your house and automobile before filing bankruptcy.
  • You do not have any extra funds left over each month after paying all your expenses. In other words, you don’t have money to reclaim assets like in a Chapter 13 bankruptcy case.
  • You don’t have a previously discharge chapter 7 bankruptcy, or chapter 13 bankruptcy in the last eight years.

If you qualify for chapter 7 bankruptcy under the means test and Median test, you give up all your nonexempt assets, and keep those that the law allows. This option gives you a new and clean start without the pressures and anxiety hanging over your head.

Chapter 13 Bankruptcy

Chapter 13 bankruptcy allows you to make partial payments to your creditors for 3 to 5 years and obtain a discharge of all your remaining debts. Chapter 13 in many instances will allow you to retain some or all your non-exempt assets, as long as you pay for the value of those nonexempt assets in your Chapter 13 repayment plan. Chapter 13 will also allow for liens and liens strip downs under certain circumstances. Chapter 13 allows “first aid” pursuant to section 362 of the bankruptcy code, in that any foreclosures at the time bankruptcy filing are stayed until future order of the bankruptcy court.

Chapter 13 bankruptcy is probably your best choice under the following circumstances:

if you need time and/or have adequate income to pay passed bills.

  • You need time to catch up on back mortgage payments. Chapter 13 repayment plans give you 3 to 5 years to make up your arrears.
  • You need time to pay off old tax debt without penalties in interest. This can be a huge savings under some circumstances.
  • You need time to pay alimony and child support that is best due.
  • You already received a discharge in a bankruptcy case within the last eight years.
  • You may be able to reduce payments on unsecured loans to the value of the collateral, and not the full amount of the loan. For example, you may owe $15,000 on automobile, but is currently worth only $10,000. So, you might get relief of the $5,000 difference.
  • You will get to keep the nonexempt property by making payments on it through your Chapter 13 repayment plan.
  • Any cosigners of your debt would be spared the harassment of bill collectors by making payments through your plan.
  • You may back of out of a chapter 13 plan and take another route without the court’s permission. A big part of choosing Chapter 13 depends on your income. Many Chapter 13 repayment plans are proposed with too much optimism. Only about two thirds of Chapter 13 plans are fulfilled. Most of those failed plans are forced into Chapter 7 or the bill collectors come back with a vengeance since you are no longer protected by the bankruptcy automatic stay provisions.

Chapter 11 Bankruptcy

Chapter 11 is your best choice if you have a business and/or substantial assets and want to continue in business. The Chapter 11 also gives you the most flexibility in negotiations. You can also withdraw from the Chapter 11, which would put you back to where you were with creditors before filing.

Chapter 11 filings allow individuals and business entities to file for reorganization, thereby allowing the petitioner to repay their general unsecured debt in their priority unsecured debt such as taxes, and their secured debts over a period, such as five years. Chapter 11 petitions also invoke the provision of 1129(b) Chapter 11 filings are known for “cram downs,” which allows a treatment term and for interest rates to imposed on a security and or unsecured creditors over their objection.  Thus, cram down or forced acceptance under certain terms and conditions are set forth in section 1129(a)(b) of the Bankruptcy Code.

The provisions of the Bankruptcy Code governing Chapter 11 filings also allows for repayment of tax debt over a five-year period commencing on the date of assessment. Further, bankruptcy court has the authority under section 507 to determine the validity, extent and amount of tax claims. In the instance of an individual filing Chapter 11, relief or a partial discharge of debt is allowed if the individual debtor contributes to disposable income, over five-year plan.

The best next move is to call an experienced bankruptcy lawyer for a free and confidential consultation, such as Harris Law in Reno, Nevada at (775) 786-7600 or (775) 690-9120 anytime.

Three (3) Adjustment of Debts – Essential for a Family, Farmer or Fisherman

Three (3) Adjustment of Debts – Essential for a Family, Farmer or Fisherman

Chapter 12 filing is for the single purpose of protecting family, farms, or fisherman with regular annual income.  A Chapter 12 filing not only allows for a stay of action against a co-debtor, but allows the adjustment of the debts, more than likely a large lien secured by the farms/family farm house, in such a way to allow the family farmer or the fisherman to retain the property.

Adjustment of Bankruptcy Fees

Chapter 7 bankruptcy costs you $335 in court filing fees, assuming it does not involve any kind of repayment plan. All attorneys’ fees must be paid before filing in these cases.

Attorney Fees are Public Record

That’s right — your attorney has to disclose his or her fees and any adjustment made thereupon and they’re available to the public. You can research any bankruptcy law firm’s fees on the federal PACER website. PACER costs $0.10 per page viewed and you can search either by bankruptcy district to get a general sense of the fees in your area of by specific law firm to get an idea of what a particular attorney will charge. Local rules may require additional disclosure, but at a minimum attorneys must list their fees on the Statement of Financial Affairs, which requires a list of:

… all payments made or property transferred by or on behalf of the debtor to any persons, including attorneys fees, for consultation concerning debt consolidation, relief under the bankruptcy law, or preparation of a petition in bankruptcy within one year immediately preceding the commencement of this case.

Average Cost of Chapter 7 Bankruptcy in Major Cities

So, let’s take a look at some PACER info on the actual bill for an attorney. We took a look at a random sample of Chapter 7 cases in a few major metro areas to get a sense of the bankruptcy attorney fees in each area. In Los Angeles, the tab ranged from $1,500 to $2,000. In Dallas, it was $774 to $1,820. In Miami, attorneys charged anywhere from $1,000 to $2,000, and in New York City, the bill was in the range of $1,000 to $2,200.

There’s a lot of adjustment and variation depending on the complexity of the case. In addition, many debtors qualify for free or discounted legal help, leading to even more variation.

One bankruptcy attorney in Los Angeles warns consumers to be on the lookout for competent, board-certified attorneys to handle their case. A bankruptcy is delicate, and you want someone with plenty of experience to represent you. A difference on the front end of a few hundred dollars could actually cost thousands in the long run, including refiling fees.

Chapter 13 filing fees are $274. These are cases in which you repay all or part of your debts over a period of time.

And finally, Chapter 11 cases have a filing fee of $1,717.

Generally, attorneys may charge in the range of $500-$1500 for simple Chapter 7 cases.  It is quite common for Chapter 13 cases to have fees of $2000-$4000 for the initial retainer before the filing and the balance paid out over a period of time or through the trustee’s disbursements. As the debtor make his monthly payment to the trustee, the trustee pays out the allowed administration fees including the attorney, taxes, and others in line with their priority.

Chapter 11 attorneys are generally chosen for their experience and record of success and are not confined usually by the attorney’s rates.

Your actual legal fees that an attorney would charge will depend on how much time is needed to resolve your case. Before 2005 and the new BAPCPA bankruptcy law, the “Bankruptcy Reform and Consumer Protection Act,” many attorneys quoted a flat fee and additional fees for, particularly complicated cases. Unfortunately, under BAPCPA, all cases are now complicated, and most attorney’s fees depend on the amount of time involved.

There are certain ways to have an adjustment to raise attorney fees in order to pay an attorney, in the most common way is to borrow against non-exempt assets, especially in a case of Chapter 11 filing.  Typically, in Chapter 13 bankruptcy or Chapter 7 filings, at least early on in the year, the Debtor may have access to tax refund money, which allows for payment of some or all those monies to the attorney to fund the bankruptcy filing.

I know there is a lot of information here so my advice is to call our office at (775) 786-7600 or (775) 690-2190 anytime to set up a complimentary and confidential consultation with me at your earliest convenience. You can also visit our new business Facebook Page for more information.