Novel ‘Bifurcated’ Bankruptcy Lawyer Payments Gets Court Boost

A novel way to fund personal liquidation bankruptcy filings that allows debtors to avoid prohibitive upfront payments for their cases got a boost from a Delaware bankruptcy judge.

Attorney Cynthia L. Carroll could collect a reasonable fee of about $2,500 for her “post-petition,” or post filing, services in a “no-money-down” Chapter 7 case, Judge Laurie Selber Silverstein said Nov. 8.

The Justice Department’s U.S. Trustee has objected in several recent cases to the practice of bifurcating fees for pre- and post-petition services, including the liquidation bankruptcy Carroll filed in February for Jordana Ndon.

Although Ndon’s case was “uneventful,” the U.S. ...