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 Texas. 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 several of these services (such as filing plan modifications or motions).
Presumptive Fee Guidelines in Bankruptcy Courts Across Texas
We’ve reviewed Chapter 13 fee guidelines that bankruptcy district courts in Texas have issued (usually in the form of local rules or “standing orders”). The fees our readers told us they paid—typically from $2,500 to $3,500—fall in line with the maximum amounts recommended by the courts in Texas.
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.)
- $3,500 for individual, nonbusiness cases
- $4,000 for cases that involve certain businesses (including those with at least $100,000 in monthly gross receipts, employees other than family, or a liquor license), and
- amounts for additional services listed in the guidelines, such as opposing a creditor’s motion to lift the automatic bankruptcy stay or filing a modification of the Chapter 13 plan, a motion to sell property, or a mortgage modification.
The guidelines also spell out services that must be included in the basic fee.
The presumptive fee in the Western District of Texas is $3,600 for routine Chapter 13 cases that don’t involve a business. Different divisions in the district (which includes Austin, San Antonio, El Paso, and Waco) have issued orders that set other fees and describe the included services. For example:
- In the Austin Division, the benchmark fee for a nonbusiness case rises to $3,900 if the Chapter 13 plan is confirmed at the first confirmation hearing. The benchmark fee for a business case is $4,900. This division spells out services that are “presumed” to be included in the benchmark fee, the procedure for requesting additional fees, and presumptive fees for handling contested matters after confirmation of the plan.
- The San Antonio Division also has a presumed fee of $4,900 for business cases, but it requires a detailed application and hearing for any additional fees, including fees for services not listed as covered by the benchmark fee.
- $3,525 if the Chapter 13 plan isn’t confirmed at the first confirmation hearing, or
- $3,425 if the case is dismissed before or within 120 days after the plan is confirmed.
The rule also lists additional fixed fees for other services, but it doesn’t mention any different amounts for cases involving a business.
The presumptive fee in the Eastern District of Texas (which covers the eastern part of the state from the Red River to the Gulf of Mexico) is:
- $3,000 in nonbusiness cases
- $3,500 in business cases, and
- an additional $500 if the attorney performs any services related to a creditor’s motion to lift the automatic stay.