Lawyer Fees Jumped 50% After Bankruptcy Law Change
Additional work required by a new bankruptcy law has spurred a 50 percent jump in attorney fees.
The average fee in a Chapter 7 liquidation in February and March of 2007 was estimated at $1,078, compared to $712 two years before, the Wall Street Journal reports (sub. req.). In Chapter 13 reorganizations, the average fee was $3,000 in February 2008, compared to $2,000 before the Bankruptcy Abuse Prevention and Consumer Protection Act took effect in October 2005.
The findings were part of a report (PDF) issued last week by the U.S. Government Accountability Office. The new law requires debtors to satisfy a complicated means test before filing for Chapter 7 bankruptcy, the ABA Journal reported in “The Exodus Begins.”
University of Illinois law professor Robert Lawless told the Wall Street Journal that higher legal and filing fees are a significant amount of money for a family on the verge of bankruptcy. “It’s very possible to be too poor to be in bankruptcy because you can’t afford the filing,” he said.
