My goal as a Hainesville bankruptcy attorney is to get the Chapter 13 trustee to step up in front of the court four weeks after the meeting and recommend my client’s case for confirmation. If the trustee will recommend my client’s confirmation, then the payment plan is set and the creditors must abide by that payment plan. Creditors have an opportunity to file what’s known as a proof of claim to be part of the payout. If a creditor does not file a proof of claim, then that creditor will not share in any payout. If that creditor is an unsecured creditor, such as a credit card or a medical bill or a personal loan, and they do not file a proof of claim bankruptcy, then the debt will be eliminated in full as long as my client completes the Chapter 13 plan and gets a discharge.
Chapter 13 is very complicated in that many attorneys do not handle this type of case. There are complex rules and issues with regard to Chapter 13 that are not involved in other chapters of the Bankruptcy Code. Chapter 13, for one thing, is a long payment plan, and it’s a long case. Unlike Chapter 7, which can be done within approximately 120 days from start to finish, a bankruptcy Chapter 13 case is going to last anywhere from one month to 60 months. For that reason, the courts have put together a model retention agreement with regard to attorney’s fees and contracts with their clients. Under the current law in this local area, the judges have provided for a flat fee of up to $3,500.00 attorney’s fees for representation throughout the case. This model retention agreement dollar amount means that the attorney is on the hook for the legal services and the debtor is on the hook to pay those legal services throughout the five-year period as a flat fee. The benefit to the attorney is that the attorney does not have to document its time and get its time approved by the court. The court is basically saying, “This is what we are going to allow for your representation of a Chapter 13 debtor, $3,500.00 total during the life of the case.”
The benefit for the debtor is the debtor does not have to worry about it exceeding $3,500.00, as many cases would be based on pure time and dollar amount calculations. Another benefit to the debtor is the $3,500.00 does not have to be paid up front. A bankruptcy lawyer can be paid through the Chapter 13 plan over the life of the plan. Typical, attorney’s fees will be paid within the first year or two as they are sharing with some of the other secured creditors.