Payment Plans vs. Full Payment with Attorneys

[Optimistic09]

Some attorneys require that you pay them in full before you can retain them. One reason given is so that you are not creating any new debt.

Some attorneys allow a payment plan and you can retain them with a small payment. Apparently there is a form that can make that payment an approved payment in bankruptcy.

Are there any pro's or con's either way. Can having a payment plan to an attorney be detrimental in any way in the bankruptcy?

[HHM]

This issue depends on the chapter of BK.

In chapter 7
You need to read the fine print on the payment plan attorneys, you can "retain" them for a low payment, but your case won't actually be "filed" with the court until they are paid in full. There is nothing wrong with going on a payment plan to work toward your case, so long as you receive some value (i.e like being able to refer creditors to your attorney etc).
Unless there is some district specific exception (not likely), in a chapter 7, your attorney cannot become a creditor of yours. You must pay them in full for the services they render before the case is filed. Also, think about, how desperate is the attorney for business if he skirts this line and allows you to make payments during the chapter 7, I wouldn't want to hire such an attorney. I have heard of some attorneys putting people on hourly billing after the case is filed (i.e. to attend 341 meeting and post filing issueS), but really, wouldn't you rather have certainty as to cost and just pay one, flat fee, up front.

In a chapter 13.
The attorney can roll their fees into a chapter 13 payment plan. Most attorneys will want some money upfront.

The detriment to the payment plan option is if you don't complete it. If you need your attorney's help later on in the case, but have not made a payment, you are on your own. I actually don't like when attorney's roll payments into a chapter 13 because it creates a potential conflict of interest if you are in a high risk chapter 13, or if you decide for some reason not to make payment, then you are in the awkward position of owing your attorney money but needing their help (good luck).

[Optimistic09]

Thank you.

This is a Chapter 7 and as soon as we sign the retainer and set up the payment plan we can refer creditors to them so there is that benefit.

There is a flat fee and there was mention of a document that would allow them to be an approved creditor so that we could pay them during the bankruptcy.

We quit paying our cc bills two weeks ago and the calls are coming in. We are anxious to get the right attorney but do not want to get one we will be sorry about. On the other hand we don't want anything out of control by not speaking with the creditors.