Court finds that Dividend to Creditors in Chapter 13 Case is Not a Significant Factor in Attorney Fee Analysis

Court finds that Dividend to Creditors in Chapter 13 Case is Not a Significant Factor in Attorney Fee Analysis

The chapter 13 trustee has objected to confirmation of the plan on the basis that the fees requested by the debtor’s attorney are excessive. The attorney has responded and filed a memorandum in support of his request for the allowance of a fee in the amount of $3, 250. The trustee contends that this fee is excessive because: (1) there are no secured creditors in the case; and (2) the payment of the fees represents a high percentage of the total payments going to all creditors and administrative claimants.

The Debtor is a 38-year old female who is an individual debtor in this case. The total payments called for under the debtor’s plan equal $6, 300. The requested attorney fee of $3, 250 would represent 51.58% of the total payments of $6, 300. If the requested fee is allowed, the dividend to unsecured creditors would be approximately 30%. If the fee were reduced to $2, 000, as suggested by the trustee, the dividend to unsecured creditors would be approximately 44%. The debtor’s income consists of $527 per month from Social Security, $130 per month from Electronic Benefit Transfer (EBT), and $869 per month from a contribution from her husband.

The debtor is entitled to a chapter 7 discharge. The standard chapter 7 fee for the debtor’s counsel on this case would have been $1, 750. The debtor appeared at the scheduled 341 Meeting of Creditors, and absent this objection, the case is otherwise ready for confirmation.

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