QUESTION
Are these fees normal, especially the file storage fee?
Asked on Nov 15th, 2013 on Bankruptcy - Colorado
More details to this question:
My girlfriend's English is not good. She was lured into this firm by their televised commercial and their promise to do it all for $1500. She didn't closely read her Chapter 13 Bankruptcy agreement/plan. Her initial payment to the Bankruptcy lawyer was $1500. This she understood perfectly and was told this would cover everything except the filing fee. After one year of making monthly $300 payments, 80% has gone to BK lawyer, paid by the trustee. Of course the trustee is getting his 3.3% per year equaling the legal max of 10%. The total paid to the lawyer including the $1500 is over $4500 after one year. What she didn't see at the very end of the contract was the file storage fee of $150 per month. This is $1800 per year or $5400 after three years, which happens to be the same amount as her total judgement.
5 ANSWERS
Bankruptcy Attorney serving Madison, WI
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Richard B. Jacobson & Associates, LLC
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A file storage fee, especially one so absurdly high, is ridiculous. Turn the lawyer in to the body in your state (the State Bar or the Supreme Court) which disciplines lawyers. A lawyer is not permitted to charge an unreasonable fee, and this is one of the most unreasonable I've ever heard of.
Answered on Nov 27th, 2013 at 9:06 AM
Bankruptcy Law Attorney serving Livingston, NJ
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Law Office of Stuart M. Nachbar, P.C.
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I have never heard of a file storage fee.
Answered on Nov 20th, 2013 at 4:44 AM
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Her plan payment was determined based upon her disposable income. Who receives that payment amount should not be a concern. No payments to the attorney can be made without the trustee and court's approval, so it must have been approved through the plan and payments made through the trustee not your girlfriend. $4,500 is the standard no look fee for a 13 in this jurisdiction. However, I have never heard of a $150 per month storage fee. If it was approved by the trustee and court, however, then it is a legitimate charge the trustee will pay through the plan. It does not increase the payments your girlfriend must pay through the plan; rather, it just decreases what the creditors receive.
Answered on Nov 20th, 2013 at 4:43 AM
It is very common in Chapter 13 for the attorney fee to be paid from the first year or so of payments. The end result is a complete discharge of debts. If you are saying that her total debt was less than $5,400, I agree she should not have filed any form of bankruptcy, but should have arranged to pay her bills directly. However, I can't believe that anyone would be lured into filing bankruptcy from just a TV commercial. The person would have had to have not been willing to look at reality or the entire bankruptcy petition, which included the total amount of debt being paid. I am not aware of a service called file storage fee and you may want to find out what that fee is about.
Answered on Nov 18th, 2013 at 2:39 PM
Deborah F. Bowinski
Chapter 13 work almost always includes a significant portion of the attorney's fees to be paid through the confirmed plan. The court had to approve it allow the fees before the trustee could distribute funds to the attorney. There may have been a fee application filed and approved in her case. She needs to review that in order to see what is actually being paid.
Answered on Nov 18th, 2013 at 2:38 PM