In my experience as a Buffalo Grove bankruptcy attorney, I have discovered that there is not a pressing need to file most Chapter 7 cases before the attorney’s fees are paid in full. Most Chapter 7 cases do not involve any kind of significant sale date or garnishment or bank citation. Those are the exception to the rule. However, in some cases, you do need to file before the bank citation gets a turnover order or you might need to file before someone’s wages are going to be garnished. But in the majority of cases, Chapter 7 payment plan is acceptable because the debtor is getting that protection at the law firm without having to actually file as of yet.
If you file Chapter 13 bankruptcy, the fees vary once again case-by-case, location to location. In the state of Illinois and the city of Chicago and the Northern District of Illinois, the judges have adopted what they call a model retention agreement. The model retention agreement is a way where attorneys can charge a flat fee of $3500 and they do not have to itemize or document their time. Attorneys also have the ability to charge a straight hourly rate where they would have to document their time. Most debtor attorneys preferred the Chapter 13 flat fee arrangement because it takes a lot of the administration off of the case. Instead of recording every phone call and every action that you do in a case, you can simply enter into this model retention agreement with the client based on the flat fee arrangement. That agreement is been filed with the Illinois bankruptcy court and made a part of any kind of fee application that the debtor may bring before the court.
Since most attorneys are opting for the model retention agreement/flat fee agreement of $3500, there is not a lot of price shopping when it comes to Chapter 13 bankruptcy cases. Most attorneys charge the same $3500 flat fee for Chapter 13 bankruptcy cases. It is only the Chapter 7 cases where there is a wide variety of fees. There can be fees as low as $500 and there can be fees as high as $5000 depending on the Chapter 7 bankruptcy case. What is important to note is the United States Bankruptcy Court, under the jurisdiction given to it under the Bankruptcy Code has the right to review and oversee all fees charged by a bankruptcy lawyer. Plus, you can be assured that you are going to get the protection of the bankruptcy judges who oversee whether or not the fees are reasonable.
If the court feels that the fees are unreasonable, the court can order a 329 Hearing whereby the attorney for the debtor will have to give back some of the fees. You also have the Office of the US Trustee overseeing the entire bankruptcy process. In the past, that office has gone after specific debtor attorneys for excessive fees.