Arnetria R Bell

UNITED STATES BANKRUPTCY COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
IN RE: 	) 	CHAPTER 7
)
Arnetria Bell, 	)
) 	CASE NO. 25-18742
)
)
)
DEBTOR. 	) 	JUDGE DEBORAH L. THORNE
MEMORANDAM OPINION
Chapter 7 of the Bankruptcy Code is designed for the honest but unfortunate debtor
seeking a fresh start.1 Most chapter 7 debtors have few nonexempt assets and often do not
have sufϐicient cash to pay a lawyer to represent them. The inability to afford the assistance
of a lawyer often leads to dismissal of the case and creates obstacles to success in future
cases.2 Unfortunately, for the neediest, access to bankruptcy relief is challenging. Lawyers
need to be paid, and the cross-section of desperate and ϐinancially strapped debtors needing
representation makes obtaining prepetition payment of fees a challenge. Although the court
acknowledges the challenge faced by lawyers endeavoring to represent chapter 7 debtors,
the court must adhere to the strictures of the Bankruptcy Code. It is not the court’s role to
make policy which is the role of the legislative branch. United States v. All Funds on Deposit
with R.J. O'Brien & Assocs., 783 F.3d 607, 627 (7th Cir. 2015); see also City of Chicago, Illinois
1 Loc. Loan Co. v. Hunt, 292 U.S. 234, 244 (1934).
2 Debtors ϐiling without an attorney are over nine times less likely to obtain a discharge than debtors who ϐile
with an attorney. Angela K. Littwin, The Affordability Paradox: How Consumer Bankruptcy’s Greatest Weakness
May Account for Its Surprising Success, 52 Wm. & Mary L. Rev., 1933, 1974 tbl.3b (2011). Repeat ϐilers must
carefully seek the extension or imposition of the automatic stay. 11 U.S.C. § 362(c)(3).
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v. Fulton, 592 U.S. 154, 166, 141 S. Ct. 585, 595, 208 L. Ed. 2d 384 (2021) (Sotomayor, J.,
concurring).
No matter the difϐiculties a debtor may be facing, the Bankruptcy Code and the Federal
Rules of Bankruptcy Procedure do not allow payment for prepetition services after a chapter
7 bankruptcy petition has been ϐiled. The Supreme Court has held that attorneys’ fees for
work done on behalf of a chapter 7 debtor during the bankruptcy case cannot be treated as
an administrative expense and paid from estate assets.3 Lamiev.UnitedStatesTrustee, 540
U.S. 526 (2004). Similarly, section 523 of the Code lists claims that are not dischargeable but
does not include unpaid prepetition chapter 7 attorneys’ fees. InreBigger,110 F.3d 685, 688
(9th Cir. 1997). 	Even before the Lamie holding, the Seventh Circuit held that unpaid
prepetition legal fees owed in a chapter 7 case were dischargeable under section 727. Bethea
v.RobertJ.Adams&Associates,352 F.3d 1125 (7th Cir. 2003).
The Code and subsequent case law make it clear that a chapter 7 lawyer simply may
not be a creditor for unpaid services provided before the case is ϐiled. It is this current state
of the law that creates a problem for both the chapter 7 debtor and her lawyer. As Judge
Laurel Isicoff explained,
currently there are four payment options available to potential chapter 7
debtors who wish to retain counsel, each with its own set of problems and
challenges: (1) delay ϐiling the case until all the fees are paid up front; (2) the
lawyer can ϐile the chapter 7 case without getting paid in full up front and hope
that the debtor will voluntarily pay additional fees postpetition; (3) the
attorney can bifurcate the legal services; or (4) the debtor can ϐile a chapter 13
case instead so that the fees may be paid postpetition.
3 Chapters 11, 12, and 13 allow for payment of attorneys’ fees incurred during the course of the case as provided
for in 11 U.S.C. §§ 330(a)(1) and (a)(4)(B). There is no such provision for lawyers representing chapter 7
debtors.
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InreBrown,631 B.R. 77, 85 (Bankr. S.D. Fla 2021); seealso FinalReportoftheABICommission
on Consumer Bankruptcy, § 3.01, Chapter 7 Attorney’s Fees at 89 (American Bankruptcy
Institute, 2017-2019). Individuals seeking a chapter 7 discharge have limited options, and
lawyers attempting to assist debtors in need of relief may not offer services if the obligation
requires them to become a creditor in a client’s chapter 7 case.4 Because of the sensitive
nature of this relationship, lawyers representing a debtor must ϐile Form 2030, which
discloses compensation received during the preceding year, or to be received in connection
with the bankruptcy case. 11 U.S.C. § 329(a); Fed. R. Bankr. P. 2016(b); Local Rule 2016-1,
N.D. Ill. 2024. Under §727(b), any amount unpaid for prepetition work is discharged under
§727(a). Bethea,352 F.3d at 1127; InreBiggar,110 F.3d 685.
It is with this backdrop that the court analyzes the Semrad Law Firm’s (Semrad) 5
bifurcated fee arrangements with chapter 7 debtors. As explained below, the court ϐinds
that Semrad’s fee arrangement violates Sections 526 and 528 of the Code and Local Rule
2016-1. The court orders disgorgement of any fees Semrad received from Arnetria Bell,
Cierra Blackwell-Richardson, and Steveland Stewart II.
Background
Nearly all Semrad chapter 7 cases are ϐiled with no money down, a beneϐit advertised
heavily as “$0 Up-Front Bankruptcy” on its website.6 The court reviewed several months of
4 Section 327 of the Code governs the hiring of professionals in a bankruptcy proceeding. Professionals must
be a disinterested person as deϐined in the Code. Section 327 states, “Except as otherwise provided in this
section, the trustee, with the court's approval, may employ one or more attorneys, accountants, appraisers,
auctioneers, or other professional persons, that do not hold or represent an interest adverse to the estate, and
that are disinterested persons, to represent or assist the trustee in carrying out the trustee's duties under this
title.” 11 U.S.C.A. § 327(a). The code deϐines “disinterested person” as “a person that is not a creditor, an equity
security holder, or an insider.” 11 U.S.C.A. § 101(14)(a). Additionally, the Illinois Professional Rules of Conduct
states that attorneys may not hold any interests adverse to their client. IL R S CT RPC Rule 1.7(a)(1)-(2).
5 The Semrad Law Firm is commonly known as DebtStoppers.
6 https://www.debtstoppers.com
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Semrad chapter 7 ϐilings and could not ϐind any case ϐiled after only prepetition payment of
its legal fees. 7 In each case, Semrad ϐiles the required Form 2030 but also requires debtor-
clients to sign an agreement promising to pay the full amount of legal fees after the case is
ϐiled.8 The agreement states that if the debtor-client does not agree to payment of the post-
petition fees, Semrad will ϐile a motion seeking to withdraw its representation.
This court is mindful that prior to ϐiling any petition for a client, a lawyer representing
a potential debtor must do the following:
• 	Meet the client and assess whether bankruptcy is appropriate and determine
what type of bankruptcy is needed (chapter 7, chapter 13, chapter 11, or
perhaps just a cease-and-desist letter);
• 	Determine whether the potential client is eligible for bankruptcy relief;
• 	Obtain information concerning assets, liabilities, and additional information to
prepare schedules and the statement of ϐinancial affairs;
• 	Ensure that debtor-client takes the creditor counseling course required
under 11 U.S.C. § 109(h)(1); and
• 	Prepare debtor-client for responsibilities that must be undertaken to obtain
discharge.
The three cases consolidated for review of the bifurcated fee arrangement are remarkably
similar and although the court is addressing the disclosures made in Ms. Bell’s case, the
pattern the court discovered in Ms. Blackwell-Richardson’s and Mr. Stewart’s cases are
7 In some cases, Semrad did receive funds, which it used to pay the ϐiling fee in installments. It appears that if
it received funds in excess of the initial ϐiling fee payment, it held the funds until the next installment. The court
does not understand why the entire amount received is not immediately turned over to the Clerk of the Court.
8 The amounts in the consolidated cases range from $2,462 to $2,640.
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identical. In each of these cases, on the petition date, Mitchell Shanks ϐiled over seventy pages
of schedules, the statement of ϐinancial affairs, and Form 2030, as required by the Local Rules,
stating that the representation was conditioned upon the debtor
entering into and sign[ing] an agreement after the ϐiling of your bankruptcy
case to pay the Firm for services rendered after the ϐiling of your case. If you
refuse to enter into and sign the agreement within ten (10) days after the ϐiling
of your case, the Firm will ϐile a motion to withdraw from representing you.
(The Semrad Law Firm, Dkt. 1, ¶ 2). Ms. Bell and the other debtors all signed this agreement
prior to their petition dates (First Agreement). The First Agreement states that Semrad will
“be representing you in all aspects of your Bankruptcy case ϐiled under Chapter 7 of the
United Stated [sic] Bankruptcy Code except for any adversary proceedings.” Id. at ¶ 1. The
First Agreement also states that after the case is ϐiled, each debtor will be required to pay
either $2,462 in Ms. Bell’s and Mr. Stewart’s case, or $2,640 in Ms. Blackwell-Richardson’s
case. If this amount is not paid, Semrad will ϐile a motion to withdraw. Id. at ¶ 7. All three
debtors signed the First Agreement conϐirming post-petition payment.
Ms. Bell signed the First Agreement on December 4, 2025, three days prior to the
petition date. (The Semrad Law Firm, Dkt. 1). The First Agreement lists ϐive tasks taken on
prepetition. It then lists nineteen tasks the ϐirm will provide post-petition, butonlyifMs.Bell
pays$2,462.00. Paragraph 8 of the First Agreement states that Semrad will not represent the
debtor unless the debtor agrees to waive any conϐlict that may arise because the debtor is
required to pay post-petition fees. Id. at ¶ 8. 9 Finally, paragraph 9 states, “This agreement
constitutes the entire agreement between you and the Firm. Any previous discussions or
agreements are not valid or enforceable unless contained in this document.” Id. at ¶ 9.
9 It seems that Semrad knows there is a conϐlict because the majority of the legal work is done before the case
is ϐiled.
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Although Semrad ϐiled Form 2030 stating that the case was being ϐiled for $0.00, it
conditioned any further representation for Ms. Bell on the post-petition payment of
$2,462.00. This negated the initial Form 2030 disclosure made to the court that the case was
taken for no money down. (Dkt. 1).
In Ms. Bell’s case, Semrad ϐiled an Amended Disclosure of Compensation, or Amended
Form 2030 (Amended Form), nearly two months later (Dkt. 15). 	The Amended Form
included another agreement (Second Agreement) and stated that the fee charged was now
$2,462.00. The listed tasks on the Amended Form were the same as in the initial Form 2030
but was now dated December 9, 2025 (ϐive days after the ϐirst Form). The Second Agreement
was attached listing the tasks that Semrad would do and stating that Semrad “will forebear
from requesting to withdraw from representing Client(s) so long as Client(s) signs this
agreement within ten (10) days of the ϐiling of the Case.” (Recitals, Dkt. 15). 10
After discovering this pattern of ϐiling amended forms and a requirement to execute
the Second Agreement, the court requested an explanation. A hearing was held on March 25,
2026. Semrad and the Ofϐice of the United States Trustee subsequently briefed the matter.11
After reviewing the arguments of the parties, the papers ϐiled, and conducting its own
research, the court ϐinds that Semrad’s fee arrangement in these cases and many others
violates Local Rule 2016-1 and sections 526 and 528 of the Bankruptcy Code.
10 Each of the cases discussed herein have the exact same fee structure. This odd fee arrangement led the court
to scrutinize other chapter 7 petitions ϐiled by Semrad, which uncovered many other cases with the same fee
agreement.
11 Much of Semrad’s 44-page response discussed how it planned to change its method of collecting fees and not
a clear defense of the facts in these three cases. The court has continued to review chapter 7 cases ϐiled by
Semrad and has not noted a change in procedure as suggested in the Semrad response.
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Discussion
A. Semrad’sBifurcatedFeeArrangement
Semrad states that it represented each debtor on a bifurcated fee basis, which is
“permissible so long as certain client-protective guidelines are followed.” (Semrad’s
Response to Order, Dkt. 30 at 1). Citing several cases,12 Semrad argues that bifurcated fees
are allowed if “the bifurcated structure [is] clearly disclosed to the client, the client [has] a
meaningful opportunity to choose whether to proceed under the second agreement, the
attorney . . . remain[s] counsel of record through withdrawal, and the postpetition fee [is]
reasonable and correspond[s] to genuine post-petition legal services.” Id. at 2.13 Semrad has
accurately captured the requirements several courts have laid out, but “[t]he trick here is that
the post-petition contract must really be a post-petition contract . . . [L]egally operative
events—[] offer, acceptance, and exchange of consideration . . . —must in fact occur after the
date of the Chapter 7 ϐiling to qualify as a claim arising post-petition and falling outside the
scope of § 362(a)(6).” InreGrifϔin, 313 B.R. 757, 769–70 (Bankr. N.D. Ill. 2004). Again, Semrad
states it will withdraw if the Agreements are not signed.
Semrad states that it consults with prospective clients for “approximately thirty
minutes” during which its “most experienced attorneys spend a substantial portion of their
time meeting with prospective clients, advising them regarding their options under the
Bankruptcy Code, evaluating eligibility, and helping determine whether a bankruptcy ϐiling
12 Semrad cites InreBrown, 631 B.R. 77 (Bankr. S.D. Fla. 2021), InreCarr, 613 B.R. 427 (Bankr. E.D. Ky. 2020),
InreHazlett, 2019 WL 1567751 (Bankr. D. Utah 2019), InreSlabbinck, 482 B.R. 576 (Bankr. E.D. Mich. 2012),
Waltonv.Clark&Washington,P.C., 469 B.R. 383 (Bankr. M.D. Fla. 2012), and InreShatusky, 2022 WL 1599973
(Bankr. M.D. Fla. March 8, 2022).
13 Throughout its brief, Semrad largely discusses its past practices and proposed future practices. The court asked
Semrad to explain its current practice and will not be addressing its proposed future practices. See generally Semrad’s
Response to Order to Explain Amended Disclosure of Compensation at Dkt. 30.
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is appropriate at all.” (Semrad’s Response to Order, Dkt 30 at 13). Once a client agrees to
Semrad’s representation, the ϐirm completes “substantive chapter-selection counseling,
bankruptcy-options evaluation, and petition preparation” all for $0.00 “under the Pre-Filing
Engagement.” Id. at 14. This is all done prepetition. The court does not believe that even the
most experienced lawyers could meet with a prospective chapter 7 debtor for only 30
minutes and carefully and accurately determine whether the client is eligible, what type of
relief would be best, prepare 70 pages of schedules, review credit reports, and provide
appropriate explanations to the debtor. The most important services provided to any no-
asset chapter 7 debtor are those provided before the petition, schedules, and statement of
ϐinancial affairs are ϐiled. 	Afterall, these documents are signed by the debtor under the
penalty of perjury and the lawyer signs stating that the statements contained within are
accurate. 14
B. Semrad’sBifurcatedFeeArrangementViolates§§ 526and528oftheCodeand
LocalRule2016-1.
Section 526 of the Bankruptcy Code states, “A debt relief agency shall not . . . make any
statement . . . that is untrue or misleading, or that upon the exercise of reasonable care, should
have been known by such agency to be untrue or misleading.” 11 U.S.C. § 526 (a)(2). Further,
section 528 states, “A debt relief agency shall . . . execute a written contract with such assisted
person that explains clearly and conspicuously the services such agency will provide to such
assisted person; and the fees or charges for such services, and the terms of payment.” 11
14 A lawyer signs Ofϐicial Form 101 and states the following: “I, the attorney for the debtor(s) named in this
petition, declare that I have informed the debtor(s) about eligibility to proceed under Chapter 7, 11, 12, or 13
of title 11, United States Code, and have explained the relief available under each chapter for which the person
is eligible. I also certify that I have delivered to the debtor(s) the notice required by 11 U.S.C. § 342(b) and, in
a case in which § 707(b)(4)(D) applies, certify that I have no knowledge after an inquiry that the information
in the schedules ϐiled with the petition is incorrect.”
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U.S.C. § 528(a)(1)(A)-(B). As described above, Semrad’s prepetition contract is misleading
under section 526.
The initial letter and disclosure contain contradictory statements which mislead the
debtor. The scope of representation cannot both be “in all aspects of your bankruptcy case”
and conditional. Semrad’s initial Form 2030 states that it is taking on representation for the
entire case, but that representation is also conditioned on an agreement to pay fees post-
petition. How can Semrad represent debtors in “all aspects of their case” but condition this
upon signing a post-petition agreement? The promise to represent clients in all aspects is
conditional on payment of $2,462 or $2,640 after the ϐiling. If Ms. Bell and the other debtors
do not agree, Semrad will not represent them and will withdraw, leaving the debtors without
counsel. This creates “a material inconsistency that makes it impossible to tell whether or
when [Semrad] intended to provide services in the case . . . [and] justiϐies ϐinding that the
contracts are void.”InreSiegle, 639 B.R. 755, 759 (Bankr. D. Minn. 2022) (“Agreements cannot
be sufϐiciently ‘clear’ if they make inconsistent statements about what Applicant will or will
not do for Debtor in her case.”). It is clear that Semrad is not taking on representation in all
aspects of a client’s bankruptcy case, making the First Letter Agreement inaccurate.
Perhaps 	more 	problematic 	is 	that 	Semrad’s 	prepetition 	contract 	tries 	to
circumnavigate the prohibition contained in section 526(a)(2) and the automatic stay by
collecting fees post-petition for prepetition work. It tries to divide the required tasks into
pre and post-petition services. But quite obviously, the prepetition work necessary to
professionally represent a chapter 7 client requires prepetition analysis and meeting with
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the client to prepare the nearly 70 pages of schedules and statement of ϐinancial affairs.15 As
stated, the court does not believe that this analysis, counseling, and preparation of 70 pages
can be done in 30 minutes. Using the Second Agreement to collect for prepetition services is
unacceptable, since that is “merely seeking to do indirectly what is prohibited directly.” Inre
Brown, 631 B.R. at 93. This is precisely what the court believes Semrad is doing through the
maze it uses to present the bifurcated agreements to clients.
While the court recognizes lawyers’ need to receive payment for work done on behalf
of clients, the arrangement that Semrad is using violates the Code and the Local Rules. The
preparation of schedules after counseling a client about whether a bankruptcy ϐiling is in her
best interest, which type of bankruptcy is appropriate, and helping the client understand the
types of disclosures that must be made is extremely important and a time-consuming
endeavor. Although Semrad minimizes the time that this takes, this court is mindful that to
do all this work correctly, time is needed, and this work is the most time-consuming task of
the entire representation. The tasks that occur post-petition are not minimal but certainly
in many cases will only consist of representation at the meeting of creditors required under
section 341 and ensuring that the debtor takes the ϐinal credit counseling required under
section 727. 11 U.S.C. § 727(a)(11).16 Semrad is attempting to reconstruct the tasks that it
undertakes after the preparation and ϐiling of the petition and attempts to weigh them
heavily on post-petition time.
15 Each debtor signed the First Agreements—Ms. Bell on December 4, 2025, Ms. Blackwell-Richardson on July 1,
2025 (25-11248, Dkt. 1), and Mr. Stewart on November 14, 2025. (25-17705, Dkt. 1).
16 In nearly all Forms 2030 ϐiled by Semrad, other tasks such as representation of a client in an adversary
proceeding are exempted from the representation.
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Ms. Bell and the other debtors acquiesced to Semrad’s demand and signed both
agreements to avoid the discharge of the fees for prepetition work. 	As courts within this
Circuit have clearly stated, “if the debtors receive a § 727(b) discharge, pre-petition debts for
legal fees, even for their own bankruptcy case, are subject to the discharge injunction of §
524.” InreGrifϔin, 313 B.R. 757, 762 (Bankr. N.D. Ill. 2004) (citing Betheav.RobertJ.Adams&
Assocs., 352 F.3d 1125 (7th Cir. 2003)). This court ϐinds that Semrad’s fees must be disgorged.
As Judge Isicoff stated in Brown, ϐirms that enter into bifurcated fee agreements with
clients must give the debtor “a separate disclosure form that discloses he or she is being
provided the option to choose the bifurcated fee arrangement, and whether the bifurcated
fee arrangement will have a different cost than a ϐlat fee arrangement paid in advance of the
ϐiling.” InreBrown, 631 B.R. at 100. At ϐirst, it appears that Semrad is complying with this
requirement by requiring the Second Agreement be signed a few days after the First
Agreement. 17 Ms. Bell’s signature appears to be electronic, and there is no date next to her
signature, so it is not clear when she actually signed the agreement. 	Worse, the Semrad
signature, if one can call it that, is illegible and does not resemble any other wet signature,
such as Mr. Shank’s. 	Additionally, it appears to be the exact same marking as the one
appearing on Form 2030 and in many other ϐilings (Dkt. 15). This is odd as Mr. Shanks is
17 Ms. Blackwell-Richardson allegedly signed the agreement on August 8, 2025 (25-11248, Dkt. 15), and Mr.
Stewart allegedly signed the agreement on November 17, 2025 (25-17705, Dkt. 1). Like Ms. Bell, no date
appears next to either debtor’s name. The same “signature” on Ms. Bell’s Amended Form also appears on Ms.
Blackwell-Richardson’s and Mr. Stewart’s. Mitchell Shanks signed Mr. Stewart’s petition, but the court cannot
read the signature of the attorney who signed Ms. Blackwell-Richardson’s petition, but it appears to be an actual
signature. Why does Semrad use an electronic signature when it is ϐiling the documents and can easily provide
a wet signature?
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clearly the attorney who signed the prepetition agreement. The court is unsure why Semrad
is signing the post-petition agreements in this manner. 18
Although the Second Agreement states that it was signed on December 9, in Ms. Bell’s
case, it took two months to ϐile the Amended Form.19 This is a blatant violation of Local Rule
2016-1,20 which states, “An agreement signed after the disclosure statement has been ϐiled
must be ϐiled within 14 days as a supplement to the disclosure statement.” Local Rule 2016-
1, N.D. Ill. 2024. The court does not receive notice when an amended form is ϐiled, and it
cannot be tasked with combing through each of its thousands of cases to determine which
are taken on a no money down basis with a contingency that would cause counsel to
withdraw and leave the client unrepresented. 	The Amended Form 2030 appears to be
slipped onto the docket with no notice to anyone and is often ϐiled after the 341 meeting and
just prior to discharge.
The threat of withdrawing when post-petition payments are not made is simply
unacceptable. Failure to pay attorney’s fees, on its own, is not enough for bankruptcy courts
to permit an attorney to withdraw. 	In re Edsall, 89 B.R. 772, 776 (Bankr. N.D. Ind. 1988)
(“[W]here the attorney-client relationship is unimpaired by the actions of the client, so that
counsel is still able to effectively represent the debtor, the debtor's failure or inability to pay
the attorney's fees does not constitute cause justifying withdrawal, unless the unpaid fees
18 Combined with the absence of a date next to the debtor’s name and the use of the electronic signature, the
court wonders whether the post-petition agreement was actually executed post-petition.
19 The petition was ϐiled on December 7, 2026. (Dkt. 1). The Amended Disclosure was ϐiled on February 6, 2026.
(Dkt. 15)
20 This is also a violation of the Federal Rules of Bankruptcy Procedure, which similarly state, “Within 14 days
after the order for relief--or at another time as the court orders--every debtor's attorney (whether or not
applying for compensation) must ϐile and send to the United States trustee the statement required by § 329.”
Fed. R. Bankr. P. 2016.
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are so great as to impose an unreasonable ϐinancial burden upon counsel.”). 	Although
Semrad and the court are aware of this requirement, debtors seeking counsel are not, and
this court ϐinds such a statement purposefully misleading and predatory.
C. 	TheCourtMustFollowtheLanguageoftheStatute.
Semrad states that its compensation scheme “addresses a real access-to-justice
problem in consumer Chapter 7 practice” for “debtors whose ϐinancial distress drives them
to seek bankruptcy relief do not have those funds available.” (Semrad’s Response to Order,
Dkt. 30 at 2-3). As previously discussed, the court is mindful that many debtors simply do
not have funds to pay a lawyer for representation in a chapter 7 case. Prospective debtor
clients may be in ϐinancial and emotional crisis and often have struggled with ϐinancial
precarity for years prior to seeing a lawyer and ϐiling a bankruptcy petition. 21 They likely
need a discharge but have no extra cash to pay upfront. That being said, as the Seventh Circuit
points out in Bethea, an “argument about what makes for good public policy should be
directed to Congress; the judiciary's job is to enforce the law Congress enacted, not write a
different one that judges think superior.” 352 F.3d at 1127-28. The court is not in the position
to legislate and must follow the law that Congress has laid out. 22
21 P AMELA F OOHEY ET AL . DEBT ’ S GRIP , PAGES 18 – 55, (2005).
22 The American Bankruptcy Institute recommended several changes to improve the Bankruptcy Code. One of
those recommendations included changes to how debtors can pay for chapter 7 bankruptcy. Its most obvious
recommendation being “to make it easier for consumers to pay for their bankruptcies is to lower the cost of
ϐiling bankruptcy.” FinalReportoftheABICommissiononConsumerBankruptcy, § 3.01 Chapter 7 Attorney's
Fees at 93 (American Bankruptcy Institute, 2017-2019). The ABI Commission recommended changes to the
Code that essentially makes “chapter 7 attorney’s fees nondischargeable” or “authorize attorneys for chapter
7 debtors to enter into prepetition fee agreements under which the debtor could make voluntary payments
postpetition.” Id. at 94-95. Similarly, the National Bankruptcy Conference has proposed text to amend the
Bankruptcy Code to allow bifurcation of chapter 7 fees with certain safeguards. Nat’l Bankr. Conf. Proposal,
StatutoryChangestoAddressthePaymentofAttorney’sFeesinIndividualChapter7Cases, N AT ’ L BANKR . CONF.,
(Nov. 25, 2025), https://nbconf.org/our-
work/#:~:text=NBC%20Proposal%20on%20Attorney%20Fees%20in%20Individual%20Chapter%207s.
The Judicial Conference approved the recommendation of the Committee on the Administration of the
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Conclusion
Semrad’s bifurcated fee arrangement violates Sections 526 and 528 of the Code and
Local Rule 2016-1. Semrad is ordered to disclose the amount of post-petition fees received
and disgorge all post-petition payments, if any, received from Ms. Bell, Ms. Blackwell-
Richardson, and Mr. Stewart. A further status will be set for compliance.
Dated: July 1, 2026
_________________________________
Honorable Deborah L. Thorne
United States Bankruptcy Judge
Bankruptcy System and has also recommended that the Code be amended to allow bifurcation. To date no
legislation has been introduced. JCUS-SEP 2022, at p. 9.
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