Can You Discharge Divorce Attorney Fees in Bankruptcy?

Divorce and bankruptcy often go hand-in-hand.  The increased expenses of dividing one household into two, paying court filing fees, and paying two attorneys can lead the newly divorced to consider their debt relief options.  At times, that debt relief option is chapter 7 bankruptcy - and for many, it can eliminate debt in a matter of months, including divorce attorney's fees.

How Divorce Attorneys Bill Their Clients

Most divorce attorneys collect a retainer fee (which functions as a deposit) and bill their clients "by the hour."  In other words, the client pays an initial deposit that the attorney holds in a trust account.  As the attorney works on the client's case they bill the client according to the attorney's hourly rate.  At the end of each month, they send an invoice to their client that reflects the attorney's hourly rate multiplied by the total number of hours worked by the attorney for that month.  Shortly after the invoice is sent the attorney withdraws that amount from the client's "retainer fee."

If The Divorce Attorney Didn't Charge A Retainer Fee And The Client Files Bankruptcy

However, some divorce attorneys take the risk of working on their client's case without a retainer fee.  In that scenario, the attorney hopes that the client will pay their bill, but there's no guarantee. Unfortunately, if the client files chapter 7 bankruptcy - usually due to debts other than attorney fees - the general unsecured attorney fees will be discharged in a chapter 7 bankruptcy.

Are Debts for Personal Injury Resulting From A DUI Car Accident Dischargeable in Bankruptcy?

DUI car accidents can result in serious and sometimes fatal injuries.  Due to the potential severity of DUI auto accident injuries, many civil judgments against DUI drivers are substantial.  With such significant judgments, some DUI drivers may wonder whether they can escape liability in chapter 7 bankruptcy. 

So, the question is: Are Debts for Personal Injury Resulting From DUI Car Accidents Dischargeable in Bankruptcy?

Thankfully the Bankruptcy Code protects DUI personal injury victims.  Section 523(a)(9) of the Bankruptcy Code states:

(a) A discharge under...this title does not discharge an individual debtor from any debt...(9)

for death or personal injury caused by the debtor’s operation of a motor vehicle, vessel, or aircraft if such operation was unlawful because the debtor was intoxicated from using alcohol, a drug, or another substance

Accordingly, debts for personal injury resulting from a DUI car accident cannot be eliminated in bankruptcy.  With that said, note that the section only applies to debts for personal injury or death.  Debts for property damage after a drunk driving car accident may be dischargeable.

How To Prove That The Personal Injury Resulted From A DUI Car Accident

In many cases, the creditor will use the prior state court judgment as proof the injury was the result of a DUI car accident.  Absent that judgment, the creditor can still establish the required elements to deny discharge before the Bankruptcy Court.  Those elements are as follows:

the debt resulted from (1) a death or personal injury, (2) caused by the operation of a motor vehicle by the debtor, and (3) the unlawfulness of the operation because the debtor was intoxicated from using alcohol, a drug, or another substance.  (In re Felski)

Eliminating divorce attorney fees in bankruptcy

In chapter 7 bankruptcy general unsecured debt is included in the discharge order.  In practical terms, this means that credit card debt, medical bills, and payday loans are eliminated after the order for discharge is entered by the Bankruptcy Court.  However, what many clients don't know is that past attorney fees may be included in the discharge order and thereby eliminated in bankruptcy.

Divorce Attorney Fees in Bankruptcy

Most divorce and family law attorneys charge an initial retainer fee and bill against that retainer according to their hourly rate as they work on a case.  As a result, the attorney is guaranteed payment as they work on the case.  If the retainer is depleted and the client doesn't replenish the trust balance by making another payment, the attorney can withdraw from the case.  In essence, the client pays only for work as it's performed and the attorney is guaranteed payment as they work on the case.

However, in some cases, a family law attorney will work on a case without the security of a positive trust balance consisting of a retainer fee.  In these cases, the attorney may be working with the hope that the client will have money after marital property is sold or support ordered.  When divorce attorneys bill by the hour in these instances there is a risk that the client won't pay the bill and debt will accrue.  Unsurprisingly, some clients can't afford their attorney fees after divorce and turn to Bankruptcy for relief.

In chapter 7 bankruptcy divorce and family law attorney fees can be discharged and thereby eliminated as general unsecured debt.  That's possible in cases where the attorney does not have a lien against real estate but rather sends invoices in the hope the client would later pay for services.