Friday, December 13, 2013

Oregon Chapter 13 Bankruptcy Attorney Fees

In Oregon there are three standard ways that an attorney gets paid for representing a Debtor in a Chapter 13 Bankruptcy. Below is an outline highlighting the difference between the three types:


  1. A one-time Flat Fee that covers the entire life of the bankruptcy
    1. If an attorney and client enter into this option, the attorney will be entitled to be paid the flat-fee amount and no more;
    2. The attorney can not bill hourly for any work in the chapter 13 (other than a few, very unusual events such as an adversary proceeding, etc);
    3. In Oregon the maximum flat-fee through the life of the case the attorney can be paid is $4,750;
    4. It is up to the attorney how much of the flat-fee is paid before filing, and how much of the flat-fee is paid through the Chapter 13 plan payments.  Different attorneys charge different amounts up front. Some are willing to take most or all of the flat-fee through the plan payments and some want half or more paid up front. If most or all of the fees are being paid out of your plan payments the Attorney should advise the client what impact that has on their case. For example, in some cases when there is significant attorney fees being paid through the plan, the payment may need to be higher than it otherwise would, or the plan may need to last longer to cover those fees. A good chapter 13 attorney should make this very clear to the client before the case is filed.
  2. A flat-fee to cover work done to get the plan confirmed, then hourly billing after that point (ie; "flat fee through confirmation")
    1. This is the most typical agreement that an attorney and a chapter 13 debtor enter into;
    2. The attorney is granted a flat-fee, up to $3,450, that covers all work done up until the Debtors Chapter plan is confirmed. Getting a plan confirmed is typically the most work that is done in a case and can take anywhere from 3-6 months;
    3. During the "pre-confirmation" phase, the attorney is not allowed to ask for more money and must perform all work under the flat-fee amount;
    4. After the plan is confirmed, the attorney is allowed to track their work performed and bill hourly for it. These billings are knows as "supplemental fees" and must be approved by the Bankruptcy Judge.
    5. Supplemental fees (work done after confirmation) are typically paid through the Debtor's plan payment. They may or may not affect a Debtor's plan or payment, but the attorney should be ale to tell the client what impact any of the fees have.
    6. The idea behind this fee agreement is that most of the pre-confirmation work is fairly predictable. But, it is hard for the attorney to know how much work will go into the case for the next 3-5 years that it is open. This is seen as a fair way to compensate the attorney under a flat-fee agreement, and allow the attorney to be compensated for any work after that. It also is fair to the client because if there case goes smoothly with little work to do after confirmation they aren't having to pay the large flat-fee amount as explained in part 1.
  3. An hourly rate from the very start of the chapter 13 to the very end.
    1. This fee agreement essentially requires the attorney to track ALL of their time from the very start of the case to the very end. The attorney bills all work at their agreed upon hourly rate;
    2. This fee agreement is typically used when the Attorney feels that the case may be complicated to get confirmed and require more than the $3,450 allowed under option #2 above.
    3. All fees charged hourly by the attorney must be itemized and disclosed to the Court and approved by the Bankruptcy Judge.
In Oregon the Attorney must file their signed fee agreement copy along with Local Form #1305 found here.
This form tells the Court and Creditors which option the Attorney and client have entered into and how the Attorney will be compensated during the bankruptcy case.

Remember, the fees you pay to file the chapter 13 will vary based on which attorney you choose.  We offer a free initial consultation for anyone contemplating chapter 7 or chapter 13 bankruptcy. We can fully explain your options and costs to file bankruptcy and explain payment plans that are available.  Feel free to visit us online at PacificBankruptcy.