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 different parts of Michigan. 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. The presumptive fee guidelines may also spell out additional fees when the cases involve certain types of property or debts, as well as the services that should be included in the basic 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. Some of the court’s guidelines include presumptive amounts for some of these services (such as filing plan modifications or motions).
Presumptive Fee Guidelines for Bankruptcy Courts in Michigan
We’ve reviewed the Chapter 13 fee guidelines that bankruptcy district courts in Michigan have issued (usually in the form of local rules or “standing orders”). The fees our readers told us they paid—typically from $1,000 to $3,000—fall well within the maximum amounts recommended by the courts in Michigan.
Courts may change their guidelines at any time, so it’s a good idea to check with your local court to get the latest information. Use the government’s court locator tool to find the website and phone number for the bankruptcy court in your area. (Because the guidelines can be difficult to find, your best bet may be to call the court and ask.)
The guidelines for presumptive attorneys’ fees in the Western District of Michigan (which includes Grand Rapids, Lansing, Kalamazoo, and the Upper Peninsula) use a sliding scale, depending on the attorney’s level of expertise. For all services through confirmation of the Chapter 13 plan, the no-look fees are:
- $3,200 for attorneys with expertise in Chapter 13 bankruptcy, as shown through attendance in legal education seminars during the previous year; or
- $3,650 for attorneys who are certified bankruptcy specialists.
The local rules for the Eastern District of Michigan (which includes Detroit, Flint, and Ann Arbor) set a single presumptive amount—$3,500—which includes both attorney’s fees and expenses for pre-confirmation services.