Like many bankruptcy courts, the judges in Oakland Bankruptcy Court have opted for what they call the “no-look” fee model for paying bankruptcy lawyers their fees during a chapter 13 case. The idea is that most chapter 13 bankruptcy cases require the performance of the same minimum legal services. If done correctly, the qualified bankruptcy attorney in Oakland will achieve a confirmed plan for the client and, once all the plan payments have been made over the next several years, most if not all of the client’s debts will be discharged or wiped out.
Ordinarily, the Bankruptcy Code requires that an attorney file an application for compensation in which the attorney set forth all the time spend on work for the debtor in the bankruptcy case. Apparently this can be time consuming both for the attorney and for the judge who has to review the application. With a “no-look” fee system, the judge allows the attorney to charge a maximum amount and will assume that that fee is reasonable unless someone gripes and claims otherwise. If the attorney successfully gets a confirmed plan for the client, the judge will automatically approve the “no-look” fee.
In Oakland, the maximum “no-look” fee is $4,800 for a consumer chapter 13 case and $6,000 for a business case. In both types of the cases, the attorney will incur the wrath of Oakland’s chapter 13 trustee as well as the Office of the U.S. Trustee if he or she accepts more than $2,000 up front. The balance of the fee is paid by disbursements from the chapter 13 trustee office using the monthly plan payments made by the debtor.
These attorney fees are actually paid pro rata along with secured claims in the case before all other creditors get paid. (Pro rata is latin and just means in proportion to the whole.) This means that the attorney fees are often paid within the first several months after the chapter 13 plan is confirmed or approved by the bankruptcy judge.
An important caveat is that the judges of the Oakland Bankruptcy Court also allow additional $1,500 in fees in cases where the attorney successfully obtains an order from the bankruptcy court stripping off a second lien from real property. This additional fee, however, is not “no-look”; the attorney has to get an order from the judge allowing the additional fee and the chapter 13 trustee has to sign off on the application and order.
The guidelines for chapter 13 attorney fees are found in the Rights and Responsibilities of Chapter 13 Debtors and Their Attorneys, Guidelines for Payments of Attorney Fees in Chapter 13 Cases – Oakland Division, Distribution of Fund in Chapter 13 Cases
Photo courtesy of Ji-Elle (Own work) [CC-BY-SA-3.0 (http://creativecommons.org/licenses/by-sa/3.0)], via Wikimedia Commons
