Bankruptcy Retainer Agreements

The contract you sign with your bankruptcy lawyer is called a bankruptcy retainer agreement.

If you decide to hire a bankruptcy attorney, you and your lawyer will sign a contract called a retainer agreement. Read on to learn more about what a bankruptcy retainer agreement is, what it should include, and what you should watch out for.

What Is a Bankruptcy Retainer Agreement?

A bankruptcy retainer agreement is a contract you and your attorney sign when you hire him or her to represent you in a bankruptcy proceeding. The bankruptcy retainer agreement outlines both your and your attorney’s rights and responsibilities during the attorney-client relationship.

What Should a Bankruptcy Retainer Agreement Include?

The following are some of the most common provisions your bankruptcy retainer agreement should include.

Attorney's Fees and Bankruptcy Costs

A bankruptcy retainer agreement should break down all of the fees and costs associated with filing your bankruptcy. In general, a good retainer agreement will include your:

  • attorney's fees
  • court costs (such as filing fees)
  • credit report fee (your attorney's fees may already include this in some cases), and
  • any other fees associated with your particular bankruptcy case.

In most cases, bankruptcy attorneys charge a flat fee to file a Chapter 7 or Chapter 13 bankruptcy. (Learn about  average attorney's fees in Chapter 7  and  average attorney's fees in Chapter 13.) You will usually have to pay your fees in full before your attorney files your Chapter 7 case. But in Chapter 13 bankruptcy, you can pay a portion of your fees through your repayment plan after the attorney files your case. (Learn more about  the types of costs and fees involved in filing for bankruptcy.)

What to watch out for.  Your retainer agreement should clearly state how much your total attorney's fees and court costs are. In addition, the agreement should set forth how much you must pay the attorney upfront before he or she will file your bankruptcy case.

Legal Services Your Attorney Will Provide

Your bankruptcy retainer agreement should identify the legal services your attorney will provide. In many cases, your attorney's fees will cover routine bankruptcy services such as preparing your paperwork and attending  the meeting of creditors  (also called the 341 hearing). But they may not include representing you in additional hearings or contested matters (discussed below).

Legal Services That Your Attorney's Fees Don’t Cover

Your bankruptcy retainer agreement should set forth the legal services that your attorney's fees won’t cover. In most cases, your attorney’s basic fee won’t include:

Cost of Additional Legal Services

If your attorney's fees don’t cover certain types of legal services, your retainer agreement should provide how much the attorney will charge to perform such services. To represent you in an adversary proceeding, most attorneys will specify an hourly fee. To perform a specific task (such as amending your bankruptcy paperwork or opposing a motion for relief from the stay), most lawyers will charge a flat fee.

What to watch out for.  If you know that you need a service that’s not included in your attorney’s flat fee (such as filing a motion to avoid a lien), make sure to discuss how much the attorney will charge and put the amount in the retainer agreement.

Whether Other Attorneys Will Work on Your Case or Go to Court With You

In some cases, a bankruptcy attorney may use other lawyers to perform certain tasks or go to court hearings with you. Your bankruptcy retainer agreement should state whether or not the attorney will employ other lawyers to work on your case.

What to watch out for.  If your retainer agreement states that the attorney may use appearance counsel (a lawyer whose only job is to attend your court hearing), ask the attorney about who will go to court with you. If the attorney says that his or her firm typically sends an appearance counsel, you may be dealing with a bankruptcy mill. (Learn about  why you should avoid bankruptcy mills.)

Your Rights and Responsibilities

If you hire an attorney to file your bankruptcy, he or she is responsible for guiding you through the bankruptcy system and making sure that you receive a discharge. But to successfully complete your bankruptcy, you must provide your attorney with all necessary information and cooperate with him or her throughout the process. Your retainer agreement should let you know what your rights and responsibilities are in the attorney-client relationship.

When the Attorney-Client Relationship Will End

In most cases, a bankruptcy attorney will handle your case from start to finish. This means that the attorney-client relationship will continue until you successfully receive a discharge and the court closes your bankruptcy case. Your retainer agreement should clearly state when your attorney-client relationship will end.

What Will Happen to Your Attorney Fees If You Fire the Attorney

If you are not happy with your bankruptcy attorney, you may choose to fire him or her. To avoid or minimize conflicts over attorney's fees, your retainer agreement should state what will happen to your attorney's fees if you fire your lawyer.

What to watch out for.  Some bankruptcy retainer agreements may contain language that says your attorney's fees are nonrefundable or are earned upon receipt. Be aware that this language doesn’t mean your attorney automatically gets to keep all of the fees you paid. Despite what your retainer agreement says, most states have rules of professional conduct that prohibit lawyers from keeping unearned, unreasonable, or excessive fees. (Learn more about  whether you are entitled to a refund if you fire your bankruptcy attorney.)

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