In re Zachary Allen ; Tiara Donegan

Case Type:
Case Status:
20-6023 (8th Circuit, Jun 21,2021) Published
BAP for 8th Circuit affirmed ruling of bankruptcy court (ED Mo. - St. Louis) finding bifurcated fee charged by consumer debtor attorney was excessive for post-petition services where no post-petition services were incurred and services provided matched services provided to clients who elected lowever pre-petition payment only.
Procedural context:
Bankruptcy court (ED Mo. - St. Louis) granted US Trustee filed motion to determine reasonableness of Chapter 7 debtor's attorney's fees over attorney's objection. Attorney appealed to BAP for 8th Circuit.
Consumer bankruptcy attorney practicing in St. Louis filed a chapter 7 petition, creditor matrix commencing case, then filed schedules, statement of financial affairs, and disclosure of attorney compensation ten days later. Debtors received discharges with no further issues in cases. Attorney offered debtors two options to pay his attorney’s fees. Under the first option, a debtor could pay in full, up front and prepetition. In that instance, the charge would be $1,500, which would consist of $1,165 of attorney’s fees and $335 for the filing fee. If a debtor selected the second option, to pay postpetition, the charge would be $2,000, or $1,665 of attorney’s fees and $335 for the filing fee. Under either payment option, Mr. Ridings provided “pre-filing services” that included meeting with the clients; analyzing the information from the clients’ worksheet regarding their financial condition; providing the clients “due diligence, legal analysis and legal advice in order to help [them] make important legal choices and to comply with the bankruptcy code and rules;” and preparing and filing the chapter 7 petition, pre-filing credit counseling certificate, and list of creditors. The “post-filing services” promised by Mr. Ridings included: the preparation and filing of schedules, statement of financial affairs, means test calculations and disclosures; attending the meeting of creditors; “administrating and monitoring” the clients’ case and maintaining a line of communication with them; responding to inquiries from the case trustee; “reviewing and advising” the clients regarding any reaffirmation agreements, redemptions, or any motions for stay relief; and “[a]ny [unspecified] legal service required by the local rules.” In these cases, both clients selected the “later pay” option, which allowed payment to be made postpetition monthly for twelve months.
Shodeen, Dow, Ridgway

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