Do I Have to Pay My Attorneys Fees Before Filing My Bankruptcy?

I do get asked this a lot.

The short answer is “no”. You don’t have to do anything.

But if you hire a bankruptcy lawyer, and he or she files your bankruptcy before being paid in full, then tell him or her to GO POUND SAND if they want you pay them.

That’s right-unless an adversary proceeding or other unforeseen event occurs, DON’T PAY YOUR LAWYER ANOTHER DIME AFTER YOUR CASE IS FIILED!

There is a list of debts that are non-dischargeable under the federal Bankruptcy Code. Guess what-bankruptcy attorneys fees are not listed. That means that if your bankruptcy attorney files your bankruptcy with you still owing fees, then those fees are a pre-petition unsecured debt, and are discharged in the bankruptcy.

Technically (legally), those fees you still owe need to be listed on Schedule F of your bankruptcy petition as “unsecured debts”.

So why do some attorneys file cases when their fees are discharged as a result?

Well, some lawyers-believe it or not-are not very good. Some will tell you that you still owe them their fees after the case is filed. They are either misinformed or are outright lying to you-their client. Do you want an attorney that is so incompetent that they don’t know that their still-owing fees are discharged? Even worse-do you want a lawyer who lies to you in order to get paid?

I wouldn’t.

So why would a lawyer lie to you about the dischargeability of their fees?

One reason is that they may be desperate, and can’t compete with other bankruptcy attorneys based on services rendered and need a way to convince you to hire them. I don’t compete on price because there is always someone who values their service and work so low that they will work for next to nothing. See my post here about how I set my prices. The services I provide have value, and I charge a fair rate for the value of those services.

But some lawyers have such a low opinion of their services and believe that their services are not valuable-they may NOT be-and charge accordingly.

But mostly, attorneys who file your case without being paid in full are counting on the fact that you don’t know that you don’t owe them any money after your case is filed. They’re duping you. They’re assuming you don’t know any better, and they’re not telling you. I consider that criminal. Your attorney-who by law is supposed to put your interests above all others-is not doing their job. They are acting unethically. They are not being honest with their client-you.

So again I ask: do you want a lawyer who lies to you for a few hundred bucks?

Can you pay your lawyer after the case is filed?

Yes. You can do anything you want with your money after your bankruptcy.

Can your attorney ask you for payment after the bankruptcy is filed?

NO! Trying to collect a discharged debt after a bankruptcy is illegal and unethical. The Automatic Stay that goes into effect after your case is filed applies to all unsecured debt-including unpaid bankruptcy attorney fees. If your attorney asks for payment, he or she is violating federal law.  Which means that YOUR attorney is violating the law by asking you to pay owed fees after the case is filed.

Also, at your meeting with the bankruptcy trustee, the trustee will ask you if you have listed all of your creditors. If you say “yes”, and your unpaid attorneys fees are NOT listed in your schedules, then you may have committed perjury.

So your attorney has lied to you, violated federal law, and created a conflict of interest (his interest in getting paid versus your interest of not having to pay). Good lawyer, huh?

To sum up:

If your attorney files your bankruptcy before all of the attorneys fees are paid, he/she has:

  1. Lied to you if he/she says you still owe the money after the case is filed;
  2. Created a conflict of interest where his/her interests in getting paid are adversarial to your interests in having your debts discharged;
  3. Broken the law if he/she asks for payment after the case is filed;
  4. Considers his/her work to be sub-par.

If your attorney asks for payment after your bankruptcy case is filed, just say, “No”.

Occasionally I hear about a bankruptcy lawyer saying that the rest of the their fees must be paid to them before they will appear at your 341 Meeting of Creditors. Check your retainer (and Voluntary Petition) very carefully, because that is called “unbundling”, meaning that they are charging you piecemeal for different parts of the case. If your Petition and Retainer agreement don’t spell this out, then they are lying to you. Even worse, some districts (like the Eastern District of California) don’t allow this kind of unbundling.

Do these attorneys know this? Of course they do. But they don’t mind lying to your face for a little cash. Is that who you want representing you and your family’s financial interests?

How Bakersfield and Temecula Bankruptcy Lawyer Scott Bell can help

If you have found yourself in unmanageable debt, but are still hesitant to file for bankruptcy, come discuss it with us with a free consultation. You can reach us at (661) 243-1737 or (951) 296-6775. You can also speak with us directly through the Live Chat feature of our website.

Don’t let your debt ruin your life. There is a way out. Let us help.