attorney fees

[doron]

Met with a lawyer for a consultation. Was told beforehand that the fee for chapter 7 BK is 1,000. At the end of meeting lawyer says I'll be charged 2,500!

Why? Because I own a "business". Essentially, I'm self employed with no income. Now this business is a very simple business, is not incorporated and has a negative income. Several thousand dollars made, more spent on expenses. Let's say I tutor privately in English, to give some general idea of how simple it is. They come to my home, I teach, they pay, they leave. That's not the actual business but it's roughly that. No inc., no store, no inventory, no big... I don't know what...OK?

I essentially have almost NO income. I have no money. I showed the lawyer this. I also own NOTHING. I mean no property, savings, nothing. One used car. No house, boat, property. Just household stuff.

My only creditors are the credit cards. Lots of money, but no one else.

I'm getting annoyed now. Is this a normal fee? Is it normal to ask for this under these circumstances? Is it really that much more complicated because I'm self employed and a "business owner"?

[mikeinsurpri]

My attorney charged me $3k. I interviewed a few attorneys (in Arizona) and they were all in the $2,500 - $3,500 range. There's a lot of posts here about the fees, you really need to read the retainer agreement so you know what you are getting and what is included in the fees.

[lrprn]

Is this a normal fee? Is it normal to ask for this under these circumstances?

Yes and yes. Bk attorney fees vary widely across the country, so there is no "average" amount to pay. But given we don't know where you live, $2500 to file a personal bankruptcy with a business involved is actually on the lower end of the fee scale for these services.

Is it really that much more complicated because I'm self employed and a "business owner"?

Yes. From the description of your business and personal finances, your case is far from an uncomplicated, straightforward Ch 7 bankruptcy. Your lawyer will spend more hours preparing your case to file, so should get a higher fee for doing so.

I'm betting you are going to discharge a lot more than $2500. Pay a little more now to get a great return on investment (and little to no debt) later.

One more suggestion - with a business involved, you really need to interview at least 3-4 more experienced bk attorneys who frequently file Ch 7 business cases. It's complicated and you want the best legal representation to get the best outcome for yourself and your family. The lawyer with the lowest fees is very rarely that lawyer. It also often isn't the lawyer with the highest fee either.

Do the interviews. After they are finished, you'll have a much better grasp of what's ahead and are likely to know who you think will do the best job representing you.

[doron]

OK, that helps. I was shocked because the secretary had told me $1,000. I still don't see what's complicated about my case - no property, no secured credit, no messy divorce, no mortgage, ...just credit cards, very low income which I can show in the bank statements easily.

But it helps to hear this is normal.

I've googled the other lawyers in the area and this one seems the best by far, so I'll stick with them...

Thanks!

Now, the questions is how to get the money...I wonder what other people have done in this situation.

[keepmine]

OK, that helps. I was shocked because the secretary had told me $1,000. I still don't see what's complicated about my case - no property, no secured credit, no messy divorce, no mortgage, ...just credit cards, very low income which I can show in the bank statements easily.

But it helps to hear this is normal.

I've googled the other lawyers in the area and this one seems the best by far, so I'll stick with them...

Thanks!

Now, the questions is how to get the money...I wonder what other people have done in this situation.

Stop paying all debt you wish to discharge and use that money for legal fees.
However, since you have no assets and nearly no income then why the rush to file?
Get back on your feet first. After all, you have to support yourself post bk. The bk card will always be available to you.

[HHM]

There are 3 factors that go into attorney's fees. Complexity, experience, and level of service.

Most people seem to assume that a case of a certain complexity should only cost X amount. But there is so much more to what the attorney can bring to the table as far as experience and overall level of service. You can pay less up front and be nickel and dimed for every little extra, you can pay an attorney a low fee, and never speak to the attorney again until the meeting of creditors (we have had several members here end up in that situation), you can pay an attorney a higher fee and actually have access to the attorney and have the BK run smoothly.

$2,500 for your BK is probably reasonable, probably on the low side. You need to consider, the fact that you HAVE NOTHING actually works against you in your case, if you HAVE NOTHING but have a BUNCH OF DEBT, that is a red flag for the United States Trustee,

[doron]

I understand. I feel better about it now that it make sense.

I wish I had stopped paying CCs two months earlier...but I tried till the last minute...

I want to discharge this debt as quickly as possible because there's a potential short term job (hypothetical, not something waiting for me, something I could look into) which would put me over the means test BUT it would be a project that would end and a few months later I'd be in an even worse situation. I wouldn't be able to pay back the debt and I wouldn't be able to file. I think then they could sue me and freeze my bank accounts or something like that and leave me without money to pay rent. In order to move forward I have to file.

I might not have work - it's what got me to this place in the first place. But I can't look for any till this is over.

[tacomeat]

You need to consider, the fact that you HAVE NOTHING actually works against you in your case, if you HAVE NOTHING but have a BUNCH OF DEBT, that is a red flag for the United States Trustee,

not to hijack this thread, but this is an interesting statement to make. can you expound upon the notion of the red flag comment in terms of - why is it a red flag, what that means or implies, how it works against you, and what action would the trustee take because of this?

from the general theme of this site, many people (myself included) have exactly that- tons of CC debt (among other types) and little to nothing to show for it.

[HHM]

not to hijack this thread, but this is an interesting statement to make. can you expound upon the notion of the red flag comment in terms of - why is it a red flag, what that means or implies, how it works against you, and what action would the trustee take because of this?

from the general theme of this site, many people (myself included) have exactly that- tons of CC debt (among other types) and little to nothing to show for it.

It is one of the definitions of insolvency, having no assets and a lot of debt. If you took out a BUNCH OF DEBT while having no assets, that is potentially fraud. However, whether it is a red flag or not really depends on the context of the case. However, if you show up to BK court with $200,000 in debt, and nothing to show for it (no house, car, savings etc.), that can raise an inquiry from the US Trustee.

[ryan]

Yes. From the description of your business and personal finances, your case is far from an uncomplicated, straightforward Ch 7 bankruptcy. Your lawyer will spend more hours preparing your case to file, so should get a higher fee for doing so.

I guess I just don't get this either.

How can a home -based self employment situation be deemed 'complicated'
particularly since it is a service business? It sounds like no receivables, no inventory etc. If she's like most small self-employed, probably owes money for taxes at end of year, not likely getting a refund. Owns no RE, no large cash to try to exempt, only a car.

So, say she supplies last few years tax returns, bank statements, and aP&L statement....not much different than an employed person.
As to her showing up with "$200,000 in debt", she doesn;t really say how much, so if its say $50,000 in CC's whats the problem?

[iv65536]

Perhaps it might be a situation where the OP had substantial credit available on plastic, the economy tanked, and the OP was using the cards just to try to keep afloat until the economy improves, but time ran out.

[mrskal]

Just from my experience and what I am going thru now, I am self employed, and hubby has a regular job, our fee for the lawyer is the basic BK7 filing jointly fee my attorney charges. 1700, including court fee. I dont see how much more work it is really either, I have to bring my bank statements, personal and business, tax returns, P&L statement etc...but then again, I dont know much!

[doron]

Right, I was using credit cards to pay rent etc. while waiting for business to pick up/occasional consulting work to appear.

[doron]

loans vs gifts

I know this was talked about but I can't find it.

I got loans from people to pay for the attorney.

I want to be absolutely sure before I take anyone's money.

1) This has to be a loan, not a gift, in order to not count as income, right?

2) And - I can return it after BK is discharged and not before. If after - there is no danger to the lenders. Correct?