While the
Administrative Office of the U.S. Courts reported that bankruptcy filings dropped in fiscal year 2012, there were still well over 1.25 million filings, most of which were Chapter 7 cases. If you are considering handling one of those many Chapter 7 cases, ICLE contributor Doug Ellmann advises: Collect all of your fees in advance!
As Doug explains in the newly released Fifth Edition of Attorney Fee Agreements in Michigan, if you don’t collect all fees up front, you are likely out of luck if the debtor later refuses to pay. That’s because a Chapter 7 debtor’s prepetition fee agreement is dischargeable on filing and collection attempts before filing violate the automatic stay (11 USC 362(a)). Doug also recommends you enter into a separate fee agreement with the debtor when postpetition work is necessary (e.g., defending an adversary proceeding) because a debtor’s obligation under an enforceable postpetition agreement is nondischargeable.
You can read more of Doug’s tips and review his sample agreements in
chapter 5 of Attorney Fee Agreements in Michigan, Fifth Edition.