Why Bankruptcy Fees Must Be Paid Upfront

📌 1. The Automatic Stay Stops Collection — Including Attorney Fees

• When you file for bankruptcy, the automatic stay under 11 U.S.C. § 362 immediately stops most collection efforts — and that includes any attempt by your attorney to collect unpaid legal fees.

• Unpaid pre-petition attorney fees (anything owed before the filing date) become a dischargeable debt just like credit cards or medical bills.

• That means if your lawyer lets you pay after filing, they become a creditor and usually cannot legally collect the rest of their fee.

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📌 2. Ethical and Legal Rules for Attorneys

• Bankruptcy Rule 1006(b) and § 329 require attorneys to disclose all fee agreements and ensure they are reasonable.

• Collecting unpaid pre-petition fees post-filing could violate:

  • The automatic stay (§ 362)

  • The discharge injunction (§ 524)

  • Professional conduct rules (attorney discipline risk)

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📌 3. Protecting the Attorney–Client Relationship

• Paying upfront ensures there is no conflict between lawyer and client over unpaid bills during your case.

• It allows the attorney to focus on getting you relief — not chasing payment while representing you.

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📌 4. Chapter 13 Is Different

• In Chapter 13 cases, courts allow part of the attorney’s fee to be paid through the repayment plan (over 3–5 years).

• This is because the Chapter 13 trustee disburses plan payments under court supervision, so it doesn’t violate the stay.

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✅ Practical Benefits for You

• Predictable cost: You know exactly what you’ll pay before filing.

• Peace of mind: No surprise bills later.

• Compliance: Ensures your case is filed ethically and legally sound.

 

“NO LOOK” Fees

“No-look fees” are flat attorney fee amounts approved by a bankruptcy court that do not require the attorney to file a detailed fee application or itemized billing statement. They are common in Chapter 13 cases and are designed to simplify and standardize attorney compensation.

Here’s what you need to know:

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📌 What No-Look Fees Are

• Preset Fee Amounts: Each district sets a standard presumptively reasonable fee for a Chapter 13 case (and sometimes Chapter 7).

• No Detailed Billing Needed: If the attorney charges at or below this amount, the court will “look no further” — i.e., it will approve the fee without requiring a formal fee application or hearing.

• Streamlines the Process: Saves time for attorneys, trustees, and courts.

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✅ Why Courts Use No-Look Fees

• Efficiency: Eliminates the need to review hundreds of detailed time records.

• Fairness & Predictability: Ensures debtors are charged a reasonable, market-based amount.

• Encourages Access: Makes legal fees more predictable and affordable for debtors.

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📌 When Detailed Applications Are Required

• If an attorney seeks more than the no-look fee, they must:

  • File a formal fee application under 11 U.S.C. § 330 and Fed. R. Bankr. P. 2016,

  • Provide itemized billing, and

  • Justify why additional fees are reasonable and necessary.

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🔧 Practical Example

• Suppose a district sets the Chapter 13 no-look fee at $4,500.

• If the attorney charges $4,500 or less, they simply disclose it on the Rule 2016(b) disclosure form and it is approved automatically.

• If they later do additional work (e.g., defend a contested motion or modify the plan), they can request supplemental fees with an itemized application.