Pre v. Post Petition fees
For Georgia bankruptcy attorneys, how fees are structured can determine whether compensation is collectible—or subject to disgorgement. The distinction between pre-petition and post-petition fees is not academic; it directly affects enforceability, disclosure, and ethical compliance.
Pre-Petition Fees
Pre-petition fees cover all work performed before the petition is filed, including consultations, case analysis, preparation of schedules, statements, and the petition itself.
If unpaid at filing, pre-petition fees become general unsecured claims and are usually dischargeable. Attempts to collect those balances post-filing may violate the automatic stay or discharge injunction.
Best practice in Georgia is to clearly define pre-petition services in the engagement letter and avoid rolling unpaid balances into post-petition agreements.
Post-Petition Fees
Post-petition fees must be based on new consideration and a separate post-petition agreement.
- Chapter 7: Permitted for services beyond the basic case (e.g., reaffirmation negotiations, adversary proceedings, motions to avoid liens).
- Chapter 11: Counsel must obtain court approval of employment under §327, and compensation is subject to fee applications and court approval.
Without proper authorization, courts may deny or order disgorgement of fees.
Bifurcated Fee Agreements
Bifurcation separates pre-petition work from post-petition services. When used correctly, it allows debtors to pay for post-petition services after filing while keeping pre-petition fees dischargeable.
Key requirements:
- Clear written disclosures
- Voluntary client consent
- Separate agreements
- No conditioning filing on execution of post-petition contract
Disclosure Requirements
Rule 2016(b) requires disclosure of all fee arrangements and payments. Amendments must be filed if terms change. Incomplete disclosure alone can justify denial of fees.
Georgia Ethics Overlay
Georgia Rule of Professional Conduct 1.5 requires reasonable fees and clear communication. Ambiguous or misleading fee structures expose counsel to both court sanctions and State Bar discipline.
Practical Takeaway
If fees are not cleanly divided, documented, and disclosed, they are at risk. Structuring matters as much as strategy.
Common Mistakes Georgia Bankruptcy Attorneys Should Avoid
- Treating unpaid pre-petition fees as collectible after filing
- Using a single engagement agreement to cover both pre- and post-petition work
- Failing to execute a separate post-petition agreement before performing post-petition services
- Not disclosing bifurcated fee arrangements in Rule 2016(b) statements
- Conditioning filing of the case on the client signing a post-petition contract
- Charging Chapter 11 fees without first obtaining court approval of employment
- Assuming local custom substitutes for written disclosures
These errors frequently lead to fee denial, disgorgement, or disciplinary exposure—and are largely avoidable with proper structuring and documentation.
