The Fifth Circuit opened the door a crack for so-called no-money-down chapter 13s, where debtors’ counsel are not required to “eat” the filing fee, the credit counseling fee and the cost of a credit report.
The May 13 opinion by Circuit Judge Jennifer Walker Elrod gives an expansive interpretation to expenses that courts have the discretion to reimburse in fee applications by debtors’ counsel. In that regard, the opinion should be applicable in chapter 11, not only chapter 13.
The opinion seems to chip away at Lamie v. U.S. Trustee, 540 U.S. 526 (2004), where the Supreme Court held that a chapter 7 debtor’s counsel’s fees cannot be paid from estate property, and any prepetition obligation for unpaid attorneys’ fees is dischargeable.