Can Bankruptcy Help With Lawyer Fees Owed?

Debtors might argue that if they could afford to pay sizable fees to attorneys to sort out their legal problems, they wouldn't be considering bankruptcy in the first place. That might be true, but the United States Bankruptcy Code only allows you to discharge some legal fees. It protects certain attorneys and certain obligations.

Your Bankruptcy Attorney

If you decide to use an attorney's services to file for bankruptcy protection, filing won't help you with what you owe him for his services. The law builds his fees into your bankruptcy petition as part of your administrative costs of filing. Even with this protection, very few bankruptcy attorneys will file your petition and begin your case without payment up front, or at least some portion of it, because they're well aware that you might not be able to pay them later.

Family Lawyer Fees

Whether or not bankruptcy can help you with your divorce lawyer fees depends on what you incurred the fees for. You usually can't discharge those associated with child support or spousal support litigation, because child support and spousal support cannot be discharged. The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 linked attorneys' fees associated with such issues to the debts themselves. However, if your divorce did not involve contested support issues, or if you used a family law attorney for some issue other than a divorce, your bankruptcy will probably discharge the debt.

Civil Lawsuits

Most attorneys who handle civil lawsuits, such as personal injury cases, work on a contingency fee basis. This means that you don't have to pay your attorney in this type of matter until she recovers money for you. When she receives a check for the money owed to you, she generally deposits it in her trust account and writes you a check for the balance after deducting her legal fees. She has control of your money, so filing bankruptcy won't help you with your legal fees in such an arrangement. If you file for bankruptcy after she's paid you and has taken her percentage, the bankruptcy court will not force her to give that portion of the money back to you. If you file for bankruptcy while you're involved in civil litigation where she's representing you, and if you list her as a creditor, she will probably resign as your attorney rather than continue, knowing that you're not going to compensate her. She's under no obligation to continue representing you for free.

Other Circumstances

You generally can't discharge any debts or costs associated with criminal activity, so if your attorney fees are criminal in nature, filing for bankruptcy probably won't help.

The bankruptcy court in Georgia ruled in 2010 that even divorce attorney fees that did not have anything to do with support issues could not be discharged, because the debtor contracted for the attorney's services knowing that she was going to file for bankruptcy as soon as her divorce was over.

References

• LegalMatch; Bankruptcy: Discharging Attorney's Fees; Ken LaMance
• DivorceSupport.com: Are Attorney's Fees in a Divorce Case Dischargeable in Bankruptcy?
• Bankruptcy Law Network: Divorce Attorney's Fees Not Dischargeable in Bankruptcy -- Debtor Intended to File Bankruptcy All Along; Craig Andersen
• Tom Scott & Associates; Bankruptcy Information