Podcast- Bankruptcy Attorney Fees

Welcome to today’s podcast. I’m Alex Hernandez, your personal professor. Today’s podcast focuses on the issue of bankruptcy attorneys’ fees, including issues with credit cards and the trustee. Here’s a summarized transcript of this podcast that was edited for clarity. Feel free to listen by clicking the audio below.

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Flexibility is Key

At least with a payment plan, you can organize your documents, have the bankruptcy lawyer deal with creditor calls, and get the ball rolling. With time, you start saving money to pay your lawyer. Would we all love to get two thousand dollars upfront on every bankruptcy case? Sure.  But that’s not the reality. I don’t even consider that fair. I always offered a payment plan to my clients.

How Can You Pay Your Bankruptcy Lawyer

Clients will ask if they can pay you with a credit card. The short answer is “no.” That’s not a good idea. First of all, let’s say I’m charging you $2,000. If it’s on your credit card, why not charge $4,000 or more? Why not go all the way up to your available credit? If you’re not paying for it, it wouldn’t matter as it costs you nothing. But that is prohibited.

Someone else’s credit card can pay attorney fees. That’s between you and that person, but you can’t use your credit card. Bankruptcy trustees will look at credit reports along with the required list of documents. Typically, bankruptcy trustees request bank statements, tax returns, and pay stubs. That will be an issue if a trustee sees a substantial debt increase before filing for bankruptcy.

There are very limited exceptions to increasing debt before filing for bankruptcy. Unfortunately, I see debtors make that mistake all the time. If they know they are filing for bankruptcy, why not take that Caribbean cruise? Or, visiting Mickey Mouse for a few days in Orlando would be fun. But that will result in delays in filing the bankruptcy petition. In the meantime, debtors are suing you, garnishing your wages, and freezing your bank accounts.

When bankruptcy can be filed depends on the facts of the case. Make sure to discuss this issue with your bankruptcy lawyer. Provide details on how much was spent, when, and on what.

I use Disney World as an example because I’ve had clients do that. It seemed they were going to Disney every single weekend. I had to tell them to return no sooner than six months, and the bankruptcy was filed a year later.

Now, that brings up another issue of debtors who increase their debt to qualify for Chapter 7 bankruptcy. The trustee is likely to get into that issue. For example, I’ll consult with a client and find out that the client is driving a new car. I’ll confirm when the car was bought. If the client says six months ago, I’ll confirm that they did meet with a bankruptcy lawyer at that time. Sometimes bankruptcy lawyers tell a debtor that while they don’t qualify for bankruptcy at the moment, they would with a new car.

• Did Your Lawyer Ask These Questions?

It’s safe to say that the means test is weird. The mathematical formula of the means test lowers your income with secured debt, but not with unsecured debt. So, it’s common for bankruptcy trustees to ask when they met with the lawyer. If it were three months ago, that’s fine because the car was purchased six or seven months ago. I clearly didn’t do anything wrong. It would have been the other attorney. But one slip-up of words at the 341 meeting of creditors, and things get complicated in a hurry.

Hiring a Bankruptcy Lawyer

Hiring a bankruptcy attorney is not something that should be taken lightly. You should feel comfortable moving forward. But plenty of lawyers have a quick consultation and rush you out the door. If that happens to you, I recommend you meet with another bankruptcy lawyer.

I’ve never seen a lawyer who is in a rush to get hired, be in a rush to return client calls.  So keep that in mind because you want your lawyer to be able to answer your questions, or at least the staff. Of course, we’re not always available, but at least someone should be able to help you.

Best of luck to you, and I hope you enjoy the podcast.

Colleges and universities can purchase my bankruptcy law textbook directly from Routledge Publishing. For paralegals and students buying single copies, you can do so via Amazon Books. To access my YouTube channel, click this link. Podcast archives can be found via this link.

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Please note that the information on this site does not constitute legal advice and should be considered for informational purposes only.

This transcript was edited for clarity.

Updated on April 19, 2025.