I get that question on the phone a lot. It is perfectly understandable. In fact I am planning a wedding right now and it would be really helpful to know how much it costs for flowers and music and photographer and the rest and very rarely am I able to get the price from the vendor’s website, so trust me when I say that I understand your frustration. It is frustrating and I completely understand that before you waste your time coming in to meet with a bankruptcy attorney in Los Angeles, you want to know if you can even afford it.

However, just like with wedding flowers, my guess is you are not finding prices on the attorney’s website, just like mine. Why? Well, just like the florist will need to know if I want carnations or orchids and whether it’s a small 3 table wedding or if it will be a ballroom for 300, she can’t give a quote until she knows what she is looking at. Similarly, even with a Ch. 7, it is impossible for me to give a quote until I know what your bankruptcy case will entail.

Here is what I can tell you about my bankruptcy fees. They are very reasonable for what you are getting. And I am not just saying that. They really are. From start to finish you are meeting with just me, an experienced attorney. You are NOT meeting with a secretary who handles your case and just gets an attorney to sign off. While I do need your help gathering your documents, I don’t make you fill out lengthy, incomprehensible questionnaires. We sit down and I fill out all the documents for you while interviewing you in my office. I explain the questions and we review your answers together. You are not left wondering if you are doing things properly.

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How can I offer such reasonable fees without compromising quality?

I keep my overhead low. Your fees shouldn’t be going to pay for my fancy office, therefore my office is not fancy. A lot of attorneys have a large staff and cannot afford to charge less. I think it is not optimal for the client and because I prefer to be able to control everything about your case (yes, a little OCD, but kind of a good thing in a lawyer), I don’t have those constraints. Because I don’t have a big office bill and a bunch of salaries to pay every month, I can focus on my clients and provide quality legal services without outrageous legal fees.

Just to give you an insight into how I determine your bankruptcy fee, here are some questions I would ask to determine what the fee will be. Typically, my Chapter 7 legal fee is anywhere from $950 to $2,500. Most people’s chapter 7 legal fees turn out to be around $1,300 plus the filing fee of $306.

So how do I know what the legal fee for bankruptcy will be?

1. I look at your income, and it’s important because if you are over the median additional work will need to be done.
2. I look at the amount of debt, and it’s important because additional work will need to be done if you have a lot of creditors and additional questions may be presented by the Trustee.
3. I look at your assets to review if additional exemption planning may be necessary and that usually costs extra.
4. I look at whether you have a house and a car and what the situation is with those assets as well.

Having answered those questions, I am usually able to give my bankruptcy attorney fee to you pretty quickly and you will not be surprised by additional costs.

Chapter 13 Bankruptcy Lawyer Fee in Los Angeles, CA

For Chapter 13 bankruptcies in Los Angeles you will find a pretty standardized fee structure, just because one is recommended by the Central District of California Bankruptcy Court. While, attorneys are allowed to charge less, because of the extensive amount of work it takes to properly handle a Chapter 13 bankruptcy, most attorneys stick to the fee schedule and here is mine.

Chapter 13 bankruptcy for a person who receives a W-2 and doesn’t own a business, my attorney fee is $4,000 (with 50% paid upfront and the rest through the plan). If the Chapter 13 debtor does not want to strip their second mortgage or they don’t have a second mortgage, my legal fee is generally $3,500 (with 50% paid upfront and the rest through the plan).

For a business owner who wants to file Chapter 13 Bankruptcy in Los Angeles, mylegal fee is $4,500 (with 50% paid upfront and the rest through the plan). There is a higher fee for business owners because there are additional documents that must be prepared.

Be careful of “Bargains” when looking for a Bankruptcy Lawyer in Los Angeles

The old “you get what you pay for” is commonly used, but I don’t agree 100% with that either. Look, I love bargains. I love discounts and I believe that if you are smart and do your research good deals are out there. Having said that, you also have to be reasonable. Bankruptcy is an important legal decision that shouldn’t be taken lightly. You will find all these bankruptcy petition preparers, unlicensed “lawyers” and the like advertising ridiculously low fees and promising the sky. I would not go to a dental assistant to get my root canal (and hopefully neither would you). Similarly, I wouldn’t go to a big fancy place where a scary looking surgeon came in and talked to me for a second, didn’t remember my name or review my file, and then charged a bundle as he hustled me out of the office and had his intern handle the surgery. I would go to someone who knows what they are doing. Who will take the time to listen and who will handle my case from start to finish. Yes, I would go to the equivalent of myself with a medical degree. All joking aside, though, I hope this will be helpful and provide you with some guidance as to what to expect as far as legal fees in bankruptcy in Los Angeles.

If you would like a specific quote for your case, please feel free to call my office at (310) 481-5098.

- Potential Client: “I know bankruptcy would really make my life easier, but I want to avoid it at all costs, because I really want to protect my credit.”
- Me: “Oh, how is your credit right now?”
- Potential Client: “It’s not …great, but I heard that after bankruptcy…that’s it, you can’t buy a car, you can’t buy a house, you can’t get a credit card. Your credit is ruined for the next ten years. That just won’t work for me.”
- Me: “It is clearly a very common misconception, and therefore I am not surprised you believe it, but after helping people file for bankruptcy for over 6 years, I can tell you with certainty, it is completely false. Here is why and how I know…”

I wish I could record the following portion and just play it for all my clients so that I don’t have to repeat it as often as I do.

Here it goes…

Most people who are considering filing for bankruptcy already have bad credit or credit that is tittering on the brink of being bad and one more opened credit card with outstanding balance will make this credit score crash. The truth is that mostly filled up credit cards, missed payments, lots of inquiries for new credit look very suspicious to creditors and at the very least obtaining new credit will be very hard for the simple reason that given your income and the outstanding balances on your current cards, it doesn’t appear that you can handle any more debt. In fact, when obtaining an FHA mortgage loan, they will take a look at your current obligations and take those into account when they determine your eligibility. On the other hand, 2 years after bankruptcy you will be able to apply for the FHA loan, but because your other debts will be discharged, it will be easy to qualify for these loans that are optimal for low/middle income home buyers.

If your credit is already bad, bankruptcy will likely improve it.

What? Was that a typo? Did I mean to say that bankruptcy will improve your credit score. Yes. Yes, I did. I have seen it over and over. People come in and their credit is in the high 500s or low 600s and within a year of their bankruptcy filing, credit score goes up by 85-120 points.

How is that possible? Well, let’s think about this. When you have $40,000 in outstanding debt, and you want to buy a new car, do you think you are a great risk? Risk is basically what determines your credit score. The lower of a risk you are as a borrower, the higher your credit score will be and the lower interest you can generally obtain. If you are a highly risky borrower, the credit score will be low and the cost of borrowing will be higher. So someone with outstanding debt will have to use that same sum of money to repay the car loan and other creditors. Whereas a client who filed for bankruptcy and had all his debts discharged, is a less risky borrower, for 2 reasons. A bankruptcy client is a less risky borrower because they can’t file for Chapter 7 bankruptcy for another 8 years, whereas a person with lots of outstanding debt and no bankruptcy might very well file and discharge this obligation as well. A bankruptcy client is also a less risky borrower because they don’t have other creditors and therefore can use all the remaining money to repay the new creditor, rather than having to split the same available pie into more pieces.

I repeatedly hear stories from my clients who were able to refinance for a better interest rate, who got a 0% interest loan on their vehicle, as well as clients who got new credit cards with better interest rates than before. I have clients who purchased a house and obtained a favorable loan only a few years after bankruptcy. That’s how I know that what I am discussing here is not just what I hope the truth is, but is a fact. When I just started practicing bankruptcy law, I was a lot more hesitant to answer the question about credit, because I didn’t have actual facts from my own clients who filed. I heard from other attorneys, but just didn’t know if it was hype or truth. Now I do and I have no problem making these statements, because I know them to be true.

It’s not all great news. The reality is that if your credit is great before you file for bankruptcy, it will certainly go down for a period. Also, finding an apartment to rent may be harder after you file for bankruptcy and for those people that need to move, I usually recommend that they complete the move before we file. At the same time, it may be impossible to predict the future. There are so many people who are going through foreclosures, short-sales, and bankruptcies these days that I don’t think landlords have the option of being as picky as they once were, but I want my clients to be aware that their ability to obtain a rental may be hindered by the bankruptcy filing without obtaining a co-signor, etc.

If you have questions about your credit, I am able to pull up your credit report that will give us your current credit score as well as estimate what your credit will be a year after bankruptcy.

Feel free to call my office for a free initial consultation at (310) 481-5098.

A. How big will my Plan payment be?

The Plan payment must at least cover the necessary debts.

“Necessary Debts”

Mortgage arrearages, car payment arrearages, Trustee fees, remaining attorney fees, priority taxes. These need to be paid in entirety through your proposed plan. As such, the plan payments have to be large enough to at least cover those payments. Let’s say that your proposed Plan payment equals X for 36-60 months. This X payment times 36 or 60 months of payments, should cover all the “necessary” debts – the smallest pot.

Example: if you propose a 60 months plan and your mortgage arrearage on your first mortgage is $36,000, Trustee fees are $4,000, Attorney fees are $2,000 and Priority taxes are $12,000. The minimum your X times 60 months should be is $54,000. Therefore the minimum Plan payment you can propose to allow for a feasible plan is $900/month for the next 60 months. While there could be some step up proposals if you adhere to certain rules, pay attention to the size of the pot and make sure that the plan you propose covers the “necessary debts.”

Therefore, from this example you have to be able to make a plan payment of $900 every month in order to have a successful chapter 13 plan. Keep that in mind when reading the following section.

Note, in the Central District of California, regular monthly mortgage payments as well as car payments that become due after the case is filed are paid directly to the lender. As such, they do not go into the small pot calculations, just the arrearages for the same.

B. How little can my Plan payment be?

The rule is that if you propose to pay less than 100% to your creditors, your plan has to commit your “entire disposable income” to the payments. You have to make best efforts to repay all your creditors.

Length of Plan

The length of you plan will usually depend on whether you are over the median or under the median on Form 22C. If you are over, then the plan will definitely be 60 months. If under, then plan duration will be 36-60 months.

Form 22C may also dictate in part what the plan payment will be. At times, it will give a figure of disposable income that will have to be balanced with the figure you receive from reviewing your current income and expense schedules (Schedule I and Schedule J). However, most of the time Form 22C will have a negative or small figure if filled out correctly in a Chapter 13 and Schedule I minus Schedule J will govern the Plan payment amount.

Schedule I is the Schedule of your income and for most people that receive a paycheck that figure will be fixed and you won’t be able to manipulate it by much. However, Schedule J, is a schedule of your expenses. While some expenses are a must and are fixed, certain things like cable and socializing as well as a third car can be reviewed and adjusted. Further, the expenses must be reasonable and an experienced bankruptcy attorney will be able to easily spot expenses the Trustee or Judge will take issue with and adjust Schedule J accordingly to prevent future issues.

Note, because of that minimum payment discussed in Part A, your Schedule I minus Schedule J, have to leave at least that amount allowing you to propose a successful plan. In the above example, your regular monthly income minus your expenses should still leave $900 for you to propose a feasible plan.

If Schedule I minus Schedule J figure is less, your situation is not hopeless if you can do the following:

- Increase income by getting a tenant.
- Have your family contribute money to assist you in proposing a feasible plan.
- Obtain an additional job.
- Reduce your expenses, by removing a car payment, cable expenses, etc.

Be honest with yourself – can you really make that Plan payment?

I fully understand that by the time people consider bankruptcy, they have already reduced their expenses to the max. As such, when I review a case for a potential Chapter 13, I want to make sure that the client can propose a plan they can live with. If the payment is beyond what you can realistically pay, in most situations, proposing a Chapter 13 Plan is a waste of time and money and other options should be considered. Having said that, sometimes people file a Chapter 13 to buy some time, but in that situation the Client should weigh the benefits of added time with the money they will spend on attorney and court fees.

This is complicated and is provided on the blog mainly to illustrate that the question requires a set of complicated calculations as well as knowledge of various rules. As such, it is important to contact a bankruptcy attorney thoroughly familiar with the workings of Chapter 13 bankruptcies. I would say that under most circumstances it is virtually impossible to have a successful Chapter 13 without the help of an experienced bankruptcy attorney. I have worked with several clients trying to help them after their case has been dismissed or messed up by a petition preparer. They wasted time, money and incurred unnecessary stress. Please don’t try to save a little and risk losing a lot.

Feel free to contact my office for a free consultation so that we may discuss your options at (310)481-5098.

Lawsuit filed against you

Usually the original creditor (like American Express Centurion Bank) or a debt collector will file a lawsuit. You will know that a lawsuit was filed against you when you get a pretty hefty set of documents. The first page is likely to say “Summons” and the second page will be the beginning of the “Complaint.”

The Complaint will have allegations of your “wrong-doings.” When you don’t deal with these types of documents every day, they can be daunting. My guess is that you don’t see these often in the same way that I don’t see medical x-rays very often. As such, the Complaint may seem very intimidating. It is likely that the Complaint from your creditor will allege the following “wrong-doings”:

- Breach of contract,
- book account,
- quantum meruit-reasonable value.

This is all a roundabout way of saying, “hey, you borrowed money from us and didn’t pay back as agreed.” If that’s all your Complaint alleges then you are in the clear and can file for bankruptcy to discharge the debt. 99% of the time that will be the case.

Complications may arise when there is an allegation of fraud, but that is rarely the case and we won’t address that issue here. However, you should contact an experienced attorney in your area immediately to help you file an Answer if there is an allegation of fraud.

Filing for bankruptcy after a lawsuit

When you decide to file for bankruptcy, the lawsuit against you will stop and will be dismissed upon conclusion of your bankruptcy. Your bankruptcy attorney will handle this additional wrinkle in your bankruptcy case by taking the following additional steps:

1. List your lawsuit on Statement of Financial Affairs.
2. List the attorneys that filed the lawsuit as a party to receive additional notice on Schedule F.
3. File a Notice of Automatic Stay with the Superior Court where the Complaint was filed against you.

An experienced bankruptcy attorney will be able to help you quickly resolve the collection lawsuit in bankruptcy.

Feel free to contact us at (310)481-5098 to help you deal with your lawsuit.