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Bankruptcy. I filed for chapter 7 using an attorney to file. I need to pay extra to have him at a 341 hearing. Is it necessary?

San Jose, CA |

The paralegal I spoke suggested not to get the attorney but would like more opinions. Thanks

Attorney Answers 6

Posted

What a scam! I'm sorry to hear that someone in our profession acts like this.

While a limited scope of engagement for an attorney is possible in a Chapter 7, that kind of limit is just redicilous and I too would complain both to the state bar and the united states trustee!

The above is general legal and business analysis. It is not "legal advise" but analysis, and different lawyers may analyse this matter differently, especially if there are additional facts not reflected in the question. I am not your attorney until retained by a written retainer agreement signed by both of us. I am only licensed in California. See also avvo.com terms and conditions item 9, incorporated as if it was reprinted here. Please visit my web site: www.avanesianlaw.com for more information about my services.

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Asker

Posted

they offered me choices as to whether I wanted to pay full price to include their presence at the hearing or just to have them prepare and file for me and I picked the last option. I could still pay the remainder of the fee for representation

Posted

The 341 hearing is VERY important. I suggest you have an attorney there with you. I find this a little strange because here, in the District of Oregon, when an attorney prepares & files the petition he/she is required to also attend the hearing with the debtor, and the attorney fee includes all this work.

Please be aware that each answer is based upon the facts, or lack thereof, provided in the question. To be sure you get complete and comprehensive answers, based upon the totality of your situation, contact a local attorney who specializes in the area of law that involves your legal problem. Diane L. Gruber has been practicing law in Oregon for 26 years, specializing in family law, bankruptcy, estate planning and probate. Note: Diane L. Gruber does not represent you until a written fee agreement has been signed by you and Diane L. Gruber, and the fee listed in the agreement has been paid.

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Posted

This is shocking to me. In Massachusetts, where I practice, an attorney is required to attend the 341 meeting with his client -- it's all part of the fee we charge. I suggest complaining to the United States Trustee about this, because you should have the assistance of your attorney at the meeting.

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Asker

Posted

The charges are set as part if the deal. It's below what is paid to have them represent me. I picked that option because I could not afford the whole deal

Gary D. Bollinger

Gary D. Bollinger

Posted

In Eastern District of MO, where I practice, this unbundling of services dates back to at least the 2005 Reform Act.

Posted

At the risk of receiving more outrage and further shocking other attorneys here, I would like to offer another perspective: I charge a flat fee for all of the bankruptcies that I handle. The flat fee varies depending on if it is a Chapter 7 or 13, individual or joint, involving ownership in a corporation or other business, etc. All of the flat fee amounts I charge already have built into them the cost for me to personally appear with the client at the 341(a) meeting as part of the service, and the total flat fee is paid in full prior to filing the BK. However, occasionally I will have a client who is having a very difficult time coming up with the full flat fee retainer amount. Those clients will often ask if there is any way I can reduce the fee for them. If I have already quoted the lowest flat fee I can, and if the case is a very straight-forward Chapter 7, with no complicated issues, I will often suggest that I can reduce the fee for them by deducting the built-in cost of my attending the 341(a) if they would be interested in attending on their own. We will then discuss exactly how the 341(a) is conducted, what to expect, what the typical questions will be, etc. The client then can decide if they would be comfortable attending alone or not and if it is worth it to them to attend on their own in exchange for the reduced fee. If so, then I will reduce the fee for them and will uncheck the "Represent the Debtor at the 341(a) Meeting" box on the Limited Scope form.

Even if they are attending on their own, I will still discuss with them a day or two before the meeting, as a reminder, all of the points mentioned above as far what to expect, etc., and tell them that if the trustee asks for any corrections or additional documents or whatever, to let me know and I will take care of it. Whenever I have had a client choose to attend the 341(a) on their own, they have been thankful for the reduced fee and have stated afterward that they did not have any problems and that it was a pretty easy experience and exactly as we had discussed.

So, if the question-asker is referring to a situation where an attorney charges a fixed price and then after-the-fact states that the fee doesn't include the attorney appearing with them at the 341(a) and if they want that then it will cost extra, I agree that would be outrageous reportable conduct. I think the key words in the question are "need to pay extra." But if it is a choice being given to the client as a way to help them out with a reduced fee from regular rates, at their option, and they are comfortable with it, I don't see the problem. And, as described above, I personally have never had any problems with the few times I have given a client that option, and every time the client has been appreciative of the reduced fee.

So in the given fact situation of this question, I don't see how an answer can be given without knowing how the fee that is being charged compares with the fee being charged by other attorneys in the area. If the base fee is well below the competition, and adding an additional amount for the attorney to attend the 341(a) only brings the total fee up to an amount that is the same as what other attorneys in the area are charging, then what is the problem? However, if the base fee already is a competitive amount, and the "extra" to have the attorney attend would put it much higher than others in the area, then I can see where there would be a problem. So I wouldn't be so quick to judge and condemn the attorney referred to in the question without knowing the relative dollar amounts involved and the general rates being charged in the area.

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Asker

Posted

That's exactly my situation. And I actually commented the above attorneys answers. My mistake for note mentioning it in the first additional informations. So as it is I am just wondering is there are any risks associated with me attending solo the 341 thank you

Kathryn Ursula Tokarska

Kathryn Ursula Tokarska

Posted

Mr. Waters, do you then strike out item # 6c on Disclosure of Compensation form? We will soon have to deal with "Rights and Responsibilities" form being added to the chapter 7 cases.

William James Waters

William James Waters

Posted

Sorry I should have read the comments before responding. Whether there would be any "risks" or not for you to attend solo depends on how your petition ended up looking as far as income & expenses and whether you were able to comfortably exempt all of your assets. The main risk would be if the Trustee were to question & challenge you on the value of a large item, like your house or a car, and your response as to how the value was determined leads the Trustee to believe there may be excess value to go after. But if you are using the 703 series of exemptions and have a lot of room left in the "wildcard" exemption, then the risk is minimized. Another possible risk is the Trustee asking for an explanation on something involving the technical issues of the actual preparation of the petition, such as why a certain exemption section was used, and you not being able to answer. In that situation the Trustee may continue the 341(a) to a later date and give you time to provide the requested answer or additional supporting documents or whatever, and you could probably hire the attorney to appear with you at the continued meeting if you want. If your income is below the Means Test threshhold, and your Schedule J doesn't include any excessively high expenses, and your assets are realistically valued and were all easily exempted, then your risk of attending the 341(a) solo is much less. The way I look at it, if I have done my job correctly in the preparation of the Petition and schedules, then I never have to even say anything at the 341(a) other than stating my name for the record. Not knowing whether your Petition was correctly prepared or not makes it impossible to predict whether you would have an easy or hard time being solo at the 341(a).

Posted

Anyone else bothered by the fact that a paralegal was offering an opinion on whether to "get the attorney" for the 341 hearing? Without knowing more, this sounds suspiciously more like a petition preparing mill than a real law firm.

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Gary D. Bollinger

Gary D. Bollinger

Posted

I did wonder about that paralegal... Doesn't the rendering of an opinion, "You don't need a lawyer for that..." presumes the legal issues were examined.

Allan M. Darish

Allan M. Darish

Posted

I think Anthony may have hit the nail on the head. And while William from Simi Valley is willing to help clients reduce the fee and preps them for the 341, that seems to end up taking more time than he might typically spend with someone who has paid him to attend the 341. Out here in Michigan, if it got in front of a judge, he'd probably say if an attorney filed an appearance, he is in the case until the court lets him out. So the question becomes, did the attorney sign the petition, or was this just a mill that prepared the documents for the debtor?

Posted

What does the "Disclosure of Compensation of Attorney for Debtor(s) say? Look specifically at line #6 (c).

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William James Waters

William James Waters

Posted

I believe it is #5c, but yes, in the few situations where it has been agreed up front that I would not appear with the client at the 341(a), then I have also lined-out #5c on the Disclosure of Compensation form. Also, unless it is anticipated from the beginning and referenced in the fee agreement, I line out #5d as well (re representation in adversary proceedings, etc.). That helps keep the base fee down for a basic case. If the need for representation in an adversary proceeding or other contested matter comes up later, then a separate fee is charged at that time. That is also spelled out ahead of time in the written fee agreement.

Brian Crozier Whitaker

Brian Crozier Whitaker

Posted

While I agree with the concept of unbundling legal services, based on an opinion from Judge Hargrove some years ago it is not permitted here in the Southern District. Any attorney who prepares the Petition & Schedules can expect a call from the US Trustee if he/she does not appear at the 341(a).

William James Waters

William James Waters

Posted

I guess this is another of those situations where "it depends" on the court and the judge. I have never had an issue with doing it, and I have been at many 341(a)'s where the debtor was solo and the Trustee would only ask if they were expecting their attorney and if they say "no" the only follow-up question has been "did you pay them to be here?" If the response is no, that it was agreed the attorney wouldn't appear, the Trustee just moves on with the examination and the issue ends there. That isn't unique to just one or two of the Trustees either. I have witnessed the same scenario over and over with all of the Central District trustees.

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