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 Pennsylvania. 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 after the Chapter 13 repayment plan has been confirmed. 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 Pennsylvania
We’ve reviewed the Chapter 13 fee guidelines that bankruptcy district courts in Pennsylvania have issued (usually in the form of local rules). The fees our readers told us they paid—typically from $1,250 to $3,000—fall in line with the maximum amounts recommended by the courts in Pennsylvania, though a few paid more.
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.)
- $3,000 for debtors with below-median income, or
- $3,500 for debtors with above-median income.
- $4,500 if the debtor plans to make mortgage payments through the Chapter 13 plan, plus
- an additional $1,000 if the debtor owns a business or holds a controlling interest in a corporation or a limited liability company that operates a business.
The guidelines also state that attorneys may charge $500, without filing an application, for each modification of the Chapter 13 plan after the bankruptcy court confirmed the plan.
In the Western District of Pennsylvania (which includes Pittsburgh, Erie, and Johnstown), the guideline for presumed attorneys’ fees (in rule 2016-1) is $4,000 for all Chapter 13 cases. The rule lists the legal services that must be included in this fee. It also states that attorneys can charge no more than $500 in “no-look expenses.”