If you’re considering filing for Chapter 13 bankruptcy, you probably want to know how much you’ll have to pay your lawyer. And if an attorney has already quoted you a price, you may want to find out how it compares to what other lawyers charge. We surveyed our readers who had filed for this type of bankruptcy, and for comparison, we researched the fee guidelines used by bankruptcy courts in New Jersey. Here’s what we learned.
Approval of Chapter 13 Lawyers’ Fees
The bankruptcy court has to approve all of your financial expenditures in a Chapter 13 case—including what you pay your lawyer—so the judge will decide whether your attorney’s fee is reasonable. Many bankruptcy courts streamline this approval process by establishing guidelines for flat fees (usually called “presumptive” fees) that the judge will presume to be reasonable. If your lawyer agrees to represent you for the presumptive amount or less, the court will automatically approve the fee without looking at the specific circumstances of the case—which is why it’s sometimes called a “no look” fee.
Where bankruptcy courts have established fee guidelines, most attorneys use them to set their own fees. However, a presumptive fee isn’t an absolute maximum. Lawyers can file a detailed application to request a higher fee for cases that will require more work than usual. Also, if a case becomes more complicated than originally expected, the attorney can ask the court to approve additional fees for further services that are required.
Presumptive Chapter 13 Fee Guideline in New Jersey
In the U.S. Bankruptcy Court for the District of New Jersey, the guideline (found in local bankruptcy rule 2016-5) for presumptive attorneys’ fees and services in all Chapter 13 cases is $3,500. The rule lists the services that this fee covers. The fees our New Jersey readers told us they paid—typically from $1,500 to $3,500—fall in line with the maximum amount recommended by the court.
The court may change its rules at any time, so it’s a good idea to check on the court’s website or call to find out the latest guideline amount.