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Attorney Fees in Chapter 7 Bankruptcy May Increase

Categories: Bankruptcy Law Overview, Chapter 7

Here in the Central District of California we have a huge Pro Se Debtor population; which are filers without a lawyer.  Then, there is another group who pay a paralegal or petition preparer no more than $200.00 to assist them in preparing their bankruptcy papers. Others might higher a lawyer to do the same work and pay them to answer questions. Some lawyers may “unbundle” their services to lower their rates in a race to the bottom for some bankruptcy lawyers. Unbundled legal services is like ordering a fast food meal, one item at a time rather than a meal as a bundle. Unfortunately, it’s difficult to know what legal services are needed by consumers, unlike ordering at a fast food restaurant. This creates confusion in advertising. Remember that you get what you pay for and a cheap lawyer provides less services.

This brings me to my point.  Since many lawyers have cut services, many a client are left without a lawyer at their 341a Meeting of Creditors; Motions; and adversary proceedings. What about a U.S. Trustee case audit?  Where is your attorney when something out of the ordinary happens in your Chapter 7 Bankruptcy case? While there is a small chance that additional legal services will be required in your bankruptcy case, our bankruptcy judges are currently reviewing our Limited Scope of Appearance Form pursuant to LBR 2090.

For Bankruptcy Lawyers:  The Limited Scope of Representation Committee has created a survey to solicit comments on changes they are considering to the limited scope of appearance. Please take a moment out of your day to fill out the survey http://goo.gl/forms/mX7Gv8cK4x.

For consumers, this could mean even more bankruptcy filings without lawyers due to increased attorney fees to represent clients in situations that may never happen during their case.  The many would be paying for the few.  If that happens, our courts could be further bogged down by debtors without lawyers, asking judges and trustees their questions and pressing the patience of the bench.

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