Can Attorney Fees Be Included in Bankruptcy?

You can include attorney fees in bankruptcy in most cases. Unpaid legal bills work like credit card debt or medical bills. You can discharge them and move forward with a clean slate.

Both Chapter 7 and Chapter 13 bankruptcy treat old attorney fees as unsecured debt. Each chapter handles these debts differently, but both offer relief.

Unsure If Your Attorney Fees Qualify for Discharge?

Speak with a bankruptcy attorney for free to review your legal debts and determine which fees can be eliminated in Chapter 7 or Chapter 13. Get personalized guidance on your debt relief options today.

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How Chapter 7 and Chapter 13 Handle Attorney Fees

In Chapter 7, you wipe out unpaid attorney fees after your bankruptcy discharge. The process is straightforward and takes about four months.

Chapter 13 works differently. Attorney fees get included in your repayment plan. You pay a portion over three to five years. After your plan ends, any remaining balance gets discharged.

Your lawyer for the current bankruptcy case is an exception. You must pay those fees separately, not through your bankruptcy case.

Not All Attorney Fees Are Treated the Same

Most attorney fees are dischargeable. However, a few important exceptions exist. Understanding these exceptions helps you plan your bankruptcy filing.

Bankruptcy Attorney Fees

Filing bankruptcy costs money. You pay a court filing fee plus attorney fees for legal advice.

Chapter 7 bankruptcy attorneys require payment in full before filing. They protect themselves from having their fees discharged along with your other debts.

Chapter 13 offers more flexibility. You pay a portion upfront. The Chapter 13 trustee pays the rest through your repayment plan. You don’t need all the money before filing.

Chapter 13 attorney fees typically cost more than Chapter 7. Your bankruptcy attorney can explain the costs for your specific situation.

Divorce Attorney Fees

Divorce attorney fees require careful examination. Some are dischargeable, others aren’t. The outcome depends on what work the attorney performed.

Attorney fees for property settlement are unsecured debt. You can discharge them in bankruptcy.

Attorney fees related to alimony or child support are different. If these fees are part of the support award, you can’t eliminate them. The Bankruptcy Code prohibits discharging alimony and child support obligations.

Attorney fees from defending non-dischargeable actions also survive bankruptcy. Examples include breach of fiduciary duty, intentional torts, or criminal actions.

Attorney Fees Secured by a Lien

Attorney fees secured by a lien create complications. When you sign an agreement allowing a lien on your property, you convert unsecured debt into secured debt.

You can walk away from unsecured debt after Chapter 7. Secured debt isn’t that simple. The lien remains attached to your property even after bankruptcy.

List All Your Debts in Your Bankruptcy Petition

You must list all debts in your bankruptcy forms. The Bankruptcy Code requires complete disclosure. Outstanding attorney fees are debts you need to include.

You sign your bankruptcy petition under penalty of perjury. You certify that all financial information is accurate and complete. Include every debt incurred before your filing date.

If you’re currently pursuing legal action, disclose it. Honesty is crucial, especially when eliminating attorney fees related to ongoing cases.

What Happens After You File

Your former attorney receives notice of your bankruptcy case. They can file an objection to having their debt discharged. However, unless they fit an exception, the bankruptcy court denies their request.

Most attorney fees are dischargeable. The court treats them like credit card debt and medical bills. After discharge, you no longer owe these legal fees.

A bankruptcy attorney can review your specific attorney fee debts. They determine which fees are dischargeable and which aren’t. Getting professional guidance helps you understand your options.

Making the Right Choice for Your Financial Future

Attorney fees shouldn’t prevent you from getting debt relief. Understanding how bankruptcy treats these debts empowers you to take action.

Chapter 7 offers quick discharge of most attorney fees. Chapter 13 provides flexibility if you need time to repay debts. Both chapters offer a path to financial freedom.

Review your attorney fee debts carefully. Determine which category each debt falls into. Knowledge helps you make informed decisions about your bankruptcy filing.

Frequently Asked Questions

Can I discharge attorney fees from a divorce in bankruptcy?

It depends on what the attorney fees covered. Attorney fees for property settlement are dischargeable as unsecured debt. However, attorney fees related to alimony or child support are typically non-dischargeable if they're considered part of the support award.

How do I pay my bankruptcy attorney if I file Chapter 7?

Chapter 7 bankruptcy attorneys require payment in full before filing your case. They do this to protect themselves from having their fees discharged along with your other unsecured debts. Chapter 13 offers more flexibility with partial upfront payment.

What happens if I don't list attorney fees in my bankruptcy petition?

You must list all debts in your bankruptcy forms, including attorney fees. You sign your petition under penalty of perjury, certifying complete and accurate financial information. Failing to disclose debts can result in your case being dismissed or debts not being discharged.

Can attorney fees secured by a lien be discharged in bankruptcy?

Attorney fees secured by a lien on your property are more difficult to discharge. The lien converts unsecured debt into secured debt, which remains attached to your property even after bankruptcy. You cannot simply walk away from secured debts like you can with unsecured debts.

Can Attorney Fees Be Included in Bankruptcy? What You Need to Know