Editor's Note: Maria Michelle Nisce is a 2014 J.D./M.B.A. candidate at the University of Nevada at Las Vegas William S. Boyd School of Law and Lee Business School.

On Feb. 11, 2014, the U.S. Bankruptcy Court for the Middle District of Alabama awarded a debtor actual damages, punitive damages (five times the amount of actual damages) and attorneys’ fees for a creditor’s willful violation of the automatic stay.[1] As directed, the debtor filed his application for attorneys’ fees, and the offending creditor objected to the application. The court analyzed the propriety of an attorneys’ fee award where there was a willful violation of the automatic stay.

In Ruffini v. Norton Law Group PLLC,[1] the bankruptcy court permitted the debtors’ estate to recover pre-petition legal fees under § 548 of the Bankruptcy Code and §§ 271-273 of New York Debtor Creditor Law as fraudulent conveyances. In its decision, the court was careful to state that there is no bright-line test for determining whether pre-petition legal fees are avoidable as constructively fraudulent transfers in bankruptcy.

Under Bankruptcy Code § 329(a) and Federal Rule of Bankruptcy Procedure 2016(b), debtor’s counsel must file a compensation disclosure (a Rule 2016(b) Statement) that details legal fees charged and unpaid balances due. The local rules of the Bankruptcy Court for the Northern District of California also prescribe a “Rights and Responsibilities Statement of Chapter 13 Debtors and Their Attorneys” (the Rights and Responsibilities Statement) that details the fee arrangements between debtor and counsel.