Filing Chapter 7 may allow debtors to discharge most of their unsecured debts. There are, however, certain debts that are retained after the bankruptcy filing. Recently on our bankruptcy forum a user asked, “Are attorney fees discharged in my Chapter 7 bankruptcy case?”
What debts are not discharged under Chapter 7?
Before specifically addressing attorney fees, let’s take a closer look at when debts are not discharged. For instance, debts may not be discharged for a variety of reasons:
- You did not follow the court rules or procedures for your bankruptcy, and the court decides to deny your Chapter 7 petition.
- Your debts are listed in the Bankruptcy Code as non-dischargeable debts.
- Debts which creditors successfully argue are not dischargeable.
There are also a variety of reasons that the court may deny the Chapter 7 discharge, even if the specific debts may be dischargeable. For instance, if you do not finish the mandatory financial management course, you hide property, you destroy information pertinent to the bankruptcy, you violate a court order, or you commit any other fraudulent action related to your case.
So what debts are generally not dischargeable?
The debts listed in the Bankruptcy Code which are not discharged in Chapter 7 are fairly long and extensive but can include the following:
- Certain tax debts
- Debts owed for spousal and child support payments
- Debts to the government for fines or penalties
- Most student debts (exceptions exist)
- Unscheduled debts
- Debts for personal injury caused from a DUI
- Debts owed to certain tax-advantaged retirement plans
- Home owner’s association fees
- Attorney expenses related to child support or child custody cases
- Fines for criminal restitution
Creditors may also have the right to object to certain debt discharges. For example, if you received a cash advance for more than $925 within 70 days before filing for bankruptcy and you cannot prove that you intended to pay it back, the court may rule it is not dischargeable. There are other debts which creditors may object to which should be discussed with your lawyer.
Are Attorney Fees Dischargeable?
So, let’s go back to the original question about attorney fees.
Attorney fees are not debts which are listed as non-dischargeable in the Bankruptcy Code. The bankruptcy lawyer, however, will get paid because their expenses are included in the court costs. They are either paid up-front before they will file your Chapter 7 petition or their fees are included with the Chapter 13 bankruptcy repayment plan.
Other lawyers, however, may not get paid, although they are likely to complain to the Bankruptcy Court claiming that their attorney fees were non-dischargeable. In some cases, there may be an exception for divorce lawyers if they can convince the court that their attorney’s fees were ordered to be paid in the original child support or spousal support decision.
Bankruptcy attorney fees are always paid either before the bankruptcy petition is filed or through the Chapter 13 bankruptcy repayment process. Other attorneys, except divorce lawyers who have been smart enough to include their fees to be paid as part of the child support or spousal support order will have their fees discharged after a bankruptcy filing.
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