At Bankruptcy Advocates, most of the people we represent are wage earners, and we generally are able to exempt all of their earners from handing those wages over to the bankruptcy trustee. This is true because the bankruptcy code, up to a limited extent, exempts a debtor’s wages from bankruptcy filings.
Some higher-income debtors, such as doctors and lawyers, do not earn wages but rather they earn fees. For example, a doctor may earn $100,000 every time he performs a heart transplant or a lawyer may earn a $100,000 contingent fee when he or she settles a personal injury case for $300,000.
Even lawyers are not immune from filing for bankruptcy.
How much of a lawyer’s contingent fee belongs to that lawyer’s bankruptcy estate? It all comes down to timing.
In the above example, if the lawyer had earned the entire fee prior to filing for bankruptcy, the entire $100,000 fee would belong to the lawyer’s bankruptcy trustee. This is even true where the fee was paid after bankruptcy if the fee was actually earned prior to bankruptcy. If, however, the lawyer performed all of the work after filing for bankruptcy, the entire fee would belong to the lawyer even if the bankruptcy was not closed at the time the fee was earned.
What happens if part of the work was prior to filing and part of the work was afterward?
In those cases, the bankruptcy courts have apportioned the fee awarding that portion of the fee that was attributable to pre-petition work to the trustee and that part attributable to post-petition work to the attorney-debtor.
For example, if the court determined that 60% of the work was done before bankruptcy and 40% afterward, $60,000.00 would go the trustee and $40,000.00 would be awarded to the attorney-debtor. See In re Clayton, 215 B.R. 618 (US Bankr. Panel 9th Cir. 2016)
We at the Bankruptcy Advocates have learned that there is no such thing as a routine case. Every bankruptcy case seems to have a wrinkle that demands our attention and expertise. In the Clayton case, the attorney may have thought that all he had to do was file before the case settled and he or she would have been awarded the entire fee. But that was not the case. If you have come to the point that you need to get some advice concerning a possible bankruptcy, the sooner you get that advice the more options you will be given. As your financial circumstances deteriorate, your options will decrease.
We have been doing this work for a combined total of 65 years. We will handle your bankruptcy case with the utmost of care and respect.
Give us a call. The first consultation is always free.
Southern Illinois Bankruptcy Attorney law firm Bankruptcy Advocates is located in Carbondale and serves a wide geographic community including Carbondale, Murphysboro, Marion, West Frankfort, Johnston City, Benton, Herrin, DuQuoin, and Pickneyville. We are a debt relief agency. Our southern Illinois bankruptcy attorneys help people file for relief under the Bankruptcy Code. Give us a call at 618-549-9800 or email us at [email protected] to speak about your case or legal matter. Convenient appointment times are available.