ATTORNEY ENTITLED TO COLLECT BALANCE OF FEES
FOLLOWING DISCHARGE OF CHAPTER 13 CASE
Although attorney's fees are ordinarily treated as
administrative expenses during the pendency of a chapter 13,
such that any unpaid fees still owed when the final
discharge comes through are discharged, the bankruptcy code
permits a different treatment if the plan is confirmed.
In In re Johnson, __ B.R. __ (9th Cir. BAP 2006) the
bankruptcy court originally held that the debtor's
attorney's unpaid fees at the conclusion of the chapter 13
were discharged, because a chapter 13 discharge includes all
debts provided for in the plan unless exempted from
discharge; since attorneys' fees are typically provided for
in the plan and are not excepted from discharge, any unpaid
balance is discharged.
The Bankruptcy Appellate Panel reversed. Acknowledging that
in the typical case the chapter 13 debtor's unpaid
attorney's fees would be discharged, the court cited
authority that a confirmed plan binds all parties, even if a
provision of the plan is contrary to the Code. In this case,
the debtor had signed off on a plan that was confirmed, and
which contained a provision that any unpaid fees would not
be discharged and that the attorney could collect directly
from the debtor.
In ruling that the attorney's fees were not discharged in
this case, the court distinguished In re Hanson, 223 B.R.
775 (Bkrtcy.D.OR 1998), where the plan did not explicitly
except the attorney's fees from discharge. For full opinion
- file:http://www.bankruptcymedia.com/bkfinder/news.html#Anchorthenews
LAMIE v. US TRUSTEE (01/26/04 -
No. 02-693) (U.S. Supreme Court) Bankruptcy Code section
330(a)(1) does not authorize compensation awards to debtors'
attorneys from estate funds, unless they are employed as
authorized by section 327. To be paid from estate funds under
section 330(a)(1) in a chapter 7 case, the attorney must be
employed by the trustee and approved by the court.
SCHROEDER v. ROUSE (06/21/01 - No.
00-6092) Disgorgement of attorney's fees is an
appropriate sanction where the attorney violated the
Bankruptcy Code, the procedural rules, and the local rules by
failing to submit a statement detailing the attorney’s
compensation relating to the bankruptcy proceedings.
http://caselaw.lp.findlaw.com/data2/circs/8th/006092p.pdf
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