§ 28.2 — Getting Paid: Attorneys’ Fees for Representing Creditors

Revised: March 30, 2009

[1]

Charging creditors for representation in Chapter 13 cases is complicated by the tendency for complex legal questions to come wrapped in a small claim within a small case. Most disputes in Chapter 13 cases are resolved by negotiation, not litigation, which is good for the system generally but creates problems applying a litigation model for fees to represent a creditor.

[2]

Creditor’s counsel has the usual choice of an hourly arrangement or a fixed fee for specific services. Many creditors’ counsel charge a fixed fee for preparation of a proof of claim, for negotiation of the value, interest rate and treatment of a secured claim or for representing a mortgage holder in a Chapter 13 case. In many jurisdictions, the time necessary to do routine creditor work in a Chapter 13 case is predictable.

[3]

There are circumstances when creditors can recover attorneys’ fees from the debtor in Chapter 13 cases.1

[4]

Especially with respect to home mortgages,2 when a claim will be paid from property of the Chapter 13 estate, if that claim includes attorneys’ fees, the disclosure and application requirements of Bankruptcy Rule 2016 may apply.3 This is a very troubling and difficult prospect for creditors that might otherwise simply include (bury?) an attorneys’ fee recovery in the amount claimed on a proof of claim.4


 

1  See §§ 304.1 [ Claims for Creditors’ Attorneys’ Fees ] § 138.2  Claims for Creditors’ Attorneys’ Fees and 527.1 [ Creditors’ Attorneys’ Fees: New Recovery Rights ] § 138.3  Creditors’ Attorneys’ Fees: New Recovery Rights after BAPCPA.

 

2  See §§ 287.1 [ Timing, Procedure and Evidence Presumption ] § 135.1  Timing, Procedure and Evidence Presumption, 304.1 [ Claims for Creditors’ Attorneys’ Fees ] § 138.2  Claims for Creditors’ Attorneys’ Fees, 308.2 [ Mortgage Claim Issues ] § 138.8  Mortgage Claim Issues and 527.1 [ Creditors’ Attorneys’ Fees: New Recovery Rights ] § 138.3  Creditors’ Attorneys’ Fees: New Recovery Rights after BAPCPA.

 

3  See §§ 287.1 [ Timing, Procedure and Evidence Presumption ] § 135.1  Timing, Procedure and Evidence Presumption and 308.2 [ Mortgage Claim Issues ] § 138.8  Mortgage Claim Issues.

 

4  See §§ 272.1 [ Official Bankruptcy Form 10 and Variations ] § 131.1  Official Bankruptcy Form 410 and Variations and 304.1 [ Claims for Creditors’ Attorneys’ Fees ] § 138.2  Claims for Creditors’ Attorneys’ Fees.