bankruptcy fees and costs

How Much Does Bankruptcy Cost?

How much does it cost to file bankruptcy? Sadly, there is no easy answer. Though the expense of filing a petition to the court is fixed, what you’l...

How to Find Bankruptcy Attorney Costs in Your area?

Those are just averages, and fees have likely increased since the survey was conducted. In Chapter 13 cases, judges will review attorneys’ fees unl...

Bankruptcy Education Courses: $50

One small fee that you mustn’t forget covers credit counseling. Completion of two credit counseling courses is required for petitioners in both Cha...

How to Save Money on Bankruptcy Costs

Although everyone who files for bankruptcy protection has unmanageable debts, some applicants are worse off than others. Be sure to fully document...

How to Pay For Your Bankruptcy

Filing for bankruptcy will cost you even though you’re in no position to pay. Yes, in perhaps the ultimate Catch-22, you’ll need money to let your...

Bankruptcy Filing Fee

Filing a petition for bankruptcy typically requires a court filing fee. The bankruptcy filing fee is standardized across the United States.

Required Courses

To successfully file for bankruptcy, individuals must complete two educational courses. The first required course is a credit counseling session, which must be completed before filing. The second mandatory course is a debtor education course, which must be completed before the debts are discharged.

Other Bankruptcy Fees

There are a few additional costs and fees that may arise when filing for bankruptcy. Additional costs are typically minimal and can occur due to document printing and commuting/travel. Miscellaneous fees can occur if additional motions need to be submitted or files need to be retrieved from the courts.

Is Bankruptcy Worth It?

Bankruptcy is an option to consider for excessive debt from medical bills, utility bills, payday loans, vehicle repossession debt, personal loans and credit cards. Depending on the type of bankruptcy, individuals can eliminate all or most debt.

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The Majority View

Attorneys' fees are recoverable if based on a contract enforceable under state law or statute.

The Minority View

Attorneys' fee clauses are unenforceable. The minority view, which to date appears to have only been adopted by a small number of bankruptcy courts (and by no circuit courts), is that the post-petition attorneys' fees of an unsecured or undersecured creditor in an insolvent bankruptcy are barred by a proper reading of §506 (a) and (b).

Limitations on Post-Petition Fees by the "Majority" Courts

Even among the courts that permit awards of post-petition attorneys' fees, courts appear less likely to award attorneys' fees as the arguments stray further from those based on state-law contract rights and move toward pure bankruptcy-law arguments.

When Can Post-Petition Attorneys' Fees Receive Administrative Priority Status?

Under certain circumstances, post-petition attorneys' fees can qualify for administrative priority status, even though the underlying transaction or contract receives only general creditor status.

Reasonableness Limitations on Attorneys' Fees

Awards of attorneys' fees face yet another hurdle in many bankruptcy courts—a determination that they are reasonable. Of course, §506 (b) specifically provides that only reasonable attorneys' fees are allowable as secured claims, and many states impose reasonableness restrictions on all fees as well.

Conclusion

A claim for attorneys' fees and costs can be a significant boost to an unsecured creditor's claim. It can be used as leverage in the context of claims objections, and in some cases, even be classified as an administrative claim.

Footnotes

1 The authors gratefully acknowledge the assistance of David D. Johnson, an associate at Latham & Watkins, in researching and drafting this article. Return to article