Commissions do not affect our editors' opinions or evaluations. Can I File Bankruptcy Even Though Im Unemployed? There are states which havent issued formal opinions on the issue, and in these instances lawyers must decide if they want to take the risk. The law firm doesnt absorb the expenseinstead, when clients use a credit card, they pay the fee required by payment processing companies. As you know you cannot co-mingle funds from trust and operating accounts. You need detailed invoices, and you need to indicate the final surcharge amount clearly. 1. The Forbes Advisor editorial team is independent and objective. window.__mirage2 = {petok:"2XQf1XPHodfyC3ZyjQfrvl606.d1H0MOrouSXe.C_is-1800-0"}; This fee can only apply to credit cardsand never debit, even when a debit card is run like a credit. Colorado Now Allows Credit Card Surcharges, Rental Application Fairness Act Compliance Packet, Residential Property Management Agreement. 604A.0021. What decision would make them feel most valued? Getting paid faster means youll most likely improve your firms collection rates. So if you live in these states you cannot apply a credit card surcharge to your clients' invoices. If you're in a state where it's illegal to add surcharges to a customer's bill and you find that a business is breaking the law, you can contact your state's Attorney General's office to file a. We published this blog post in November 2021. Are there other types of e-payments a lawyer can take? The bill amounts you pay could vary each month. In addition to a court filing fee, you may also have bankruptcy attorney fees if you want legal advice to file your bankruptcy petition. July 07, 2022 FDCPA 1692f (1) Applies to a Variety of Debt Collectors Examples of Prohibited Debt Collector Charges Debt Collector May Still Be Liable When Its Payment Processor Collects Pay-to-Pay Charges Potential TILA Remedies When Pay-to-Pay Fees Apply to Payment of Credit Card Obligations But what should a NC lawyer know? For the most part, any debt you owe to an attorney is treated just like your other unsecured debt in bankruptcy, such as credit cards or your medical bills. For lawyers who are trying to maximize their profits, the question arises of whether or not these charges can be passed along to the client rather than the law firm having to pay them and reducing their income as a result. For lawyers who are trying to maximize their profits, the question arises of whether or not these charges can be passed along to the client rather than the law firm having to pay them and reducing their income as a result. While such convenience fees may have violated the spirit of the law insofar as they targeted credit card costs, it is unclear if they were technically illegal. The old law only had two exceptions. Surcharging is when a law firm passes on credit card processing fees to the client. More details are available on Visas website. Law firms need to approach such questions with a. mindsetwhat would be the best outcome for your clients? When it comes to making one-time online payments, 76% of consumers preferred to use their credit or debit cards, according to the 2017 TSYS U.S. Consumer Payment Study. There are cases where an attorney may charge a flat fee, but these flat fee rates will depend on what work is done on your behalf. Similar to fees based on the amount of your debt, an attorney might charge you a percentage of the money you'll save with the settlement. On the credit card charge, the court approved adding language to Rule 4-1.5(h), which prohibits charging clients a higher fee for using a credit card. The rest of the attorney fees will be paid in full by the Chapter 13 trustee.. Other considerations regarding credit card surcharges for law firms, , you cannot impose a surcharge on any prepaid credit or debit cards. There are some exceptions to this, especially for attorney fees related to family court matters. Reputable companies also will not charge any upfront fees. Filing for bankruptcy could also significantly negatively impact your credit for 7-10 years. (a) In a sale of goods or services, a merchant may not impose a surcharge on a buyer who uses a debit or stored value card instead of cash, a check, credit card, or a similar means of payment. For this reason, an unbundled service will cost less than hiring an attorney to handle the entire negotiation. If your firm cannot absorb credit card processing fees, looking for a payment solution that offers eChecks, like Clio Payments, is a great alternative. Under the Durbin Amendment, you cannot impose a surcharge on any prepaid credit or debit cards. Credit card surcharges are optional fees added by a merchant when customers use a credit card to pay at checkout. Editorial Note: We earn a commission from partner links on Forbes Advisor. That means that in most cases you can walk away from that debt at the end of your bankruptcy. Understanding Convenience Fees & Surcharging, 7 Reasons Why CosmoLex is the Best Alternative to QuickBooks for Your Law Firm, Your Guide to Going Paperless with Secure File-Sharing, Step into Summer: Get Out of the Office and Embrace Cloud-Based Legal Practice Management, Legal Accounting 101: Mid-Year Financial Health Checklist. Should law firms charge clients credit card processing fees? Surcharging is when a law firm passes on credit card processing fees to the client. For more tips on surcharges and online payments for lawyers, visit our payments resource hub. The fees can be a turn-off for clients. Firms intending to surcharge must notify Visa and Mastercard 30 days in advance of beginning to surcharge, Surcharging is limited to credit cards only; the practice is not allowed on all debit cards even if they have a Visa/MC logo, The amount of the surcharge must not exceed the amount it costs to process that card (Note: This rule makes it difficult to implement surcharging when firms are paying different amounts to process certain types of credit cards), Clearly notify clients of the surcharge at the time of payment, in a fee agreement and with signage at the firms offices, Use a payments system that calculates the total amount of the payment after the surcharge is added; do not simply provide a surcharge percentage and require the client to do their own math, Provide a receipt with the surcharge amount clearly identified, The discount must be displayed as an actual discount from the full price of the services, In the eyes of the card brands, a discount is not a service fee or other additional fee charged on all services and then removed for those paying by means other than cards (Note: Firms can accomplish this by displaying two prices on an invoice: a credit price and a check/bank transfer price), Clearly notify clients of the discount at the time of payment, in a fee agreement and with signage at the firms offices, Discounting may be applied to both credit and debit cards. [] Sec. First, it included an exemption for state or local governmental entities, such as the DMV or county clerk, so long as the surcharge did not exceed the actual processing charge. In some case, you can negotiate fees with credit card processors. That law said that "a seller may not impose a surcharge on a buyer who uses a credit card for an extension of credit instead of cash, a check, or a similar means of payment." Conveniently for the state, the Anti-Surcharge Law didn't apply to "a state agency, county, local governmental entity, or other governmental entity that accepts a . And, if the client disputes the charge, the merchant should not remove the funds from the trust account without notifying you first and verifying your permission. How Much Will an Attorney Charge to Negotiate With Your Creditors? The surcharge must be disclosed and billed separately. How will they handle refunds, returns, and charge backs? In most cases, the fee will be a specific percentage of the amount of debt the attorney will negotiate on your behalf. If you find yourself in this scenario you should consult with a bankruptcy attorney about your best next steps. One bit of advice that is constant is take credit cards. These strategies are known as surcharging and discounting. The new statute leaves intact the option for a cash discount. If youre considering bankruptcy, a lawyer can help you work through the process and file for bankruptcy. Negotiating your debt settlement is possible, but it doesnt always yield the best results. Many lawyers assume that charging clients an additional fee for payment processing is unethical or at least slimy. However, some states have certain requirements associated with this option. Instead, youll pay your bankruptcy attorney only a portion of the fees and costs for your case. In this blog post, well share everything there is to know about credit card surcharges so you can make a final decision for your law firm. Creating a Debt Payoff Plan That Works for You, Student Loans 101: Exploring Types, Repayment Options, and Debt Management. If you owe attorney fees when you go to file your bankruptcy case, most will be treated as unsecured debt and discharged as part of your bankruptcy case. Before you decide to do this, ask yourself is it ethical? is it legal? What Are the Pros and Cons of Filing Chapter 7 Bankruptcy? Law firms need to approach such questions with a client-centered mindsetwhat would be the best outcome for your clients? The general guidelines for each payment processor are: While it might seem appealing to implement credit card surcharges, there are many benefits to absorbing the cost. This typically happens when the company you owe money to transfers its debt to a debt collection agency. There are many rules and compliance regulations when surcharging, and its not always in the best interest of your clients or business to impose this charge. Should I File for Bankruptcy for Credit Card Debt? 2023 Forbes Media LLC. Navigating Financial Aid During and After Bankruptcy: A Step-by-Step Guide. For questions about this article, please contact Jesse Howard Witt. IMPOSITION OF SURCHARGE FOR USE OF CREDIT CARD. , which can amount to thousands of dollars depending on the complexity of your credit card debt. Business Law |Criminal Law |Outsourced General Counsel | Mediation |Immigration Law |Civil Rights Law |Litigation |Intellectual Property Law |Family Law |Bankruptcy Law |Elder Law | Estate and Probate. Because few people nowadays write checks, it's essential to enable clients to pay electronically. Our sales team is available Monday to Friday from, 2008 - 2023 Themis Solutions Inc. (Clio) | 300 - 4611 Canada Way, Burnaby, BC V5G 4X3. These companies could help you reach agreements quicker than going through an attorney, saving you time and money. Upsolve made this process extremely simple. Some attorneys charge by the hour, while others may set flat rates for specific tasks. She is passionate about economic development and is on the board of two non-profit organizations seeking to revitalize her former railroad town. In some states, the information on this website may be considered a lawyer referral service. (See C.R.S. Written by Your Upsolve Team.Legally reviewed by Attorney Andrea WimmerUpdated February 24, 2022. It's one of the greatest civil rights injustices of our time that low-income families can't access their basic rights when they can't afford to pay for help. Common Debt Negotiation Attorney Fee Structures. Can Law Firms Charge Clients for Credit Card Fees in South Carolina? Merchants are not allowed to charge more than 4% of each transaction as a credit card processing fee. Likewise, if a customer is getting a 3% rebate from his or her card, then paying the merchant 2% may not seem so bad. This method makes payments frictionless and gives you the freedom to implement, and automated paymentswhich is a preferred client payment method according to the, Focus on providing a client-centered experience. Her work has appeared on Business.com, Business News Daily, FitSmallBusiness.com, CentsibleMoney.com, and Kin Insurance. It is long and complicated, but starts with an easy-to-understand and basic premise: a lawyer shall not make an agreement for, charge, or collect an unreasonable fee or an unreasonable amount for expenses. Or you may be dealing with old attorney fees that you cant afford to pay as you enter your bankruptcy case. If your business is similar to most others, being a cash-only enterprise would cost you a lot of business. Theyre treated just like other unsecured debts, including credit card debt and medical bills., Your prior (or current) attorney will receive notice of your bankruptcy case once its filed. Law firms need to consider several things: Some lawyers dont accept credit cards because they have many use casesand not every state ethics committee has addressed these issues. Debt settlement companies should be able to provide a no-commitment estimate on how much they can save you and how much their program will cost before enrolling. If you want to negotiate with your creditors, you might be able to hire an attorney to handle the entire negotiation process until settlement or perform a specific task related to the negotiation (called an "unbundled" service), like drafting a settlement proposal. When it comes to credit and debit card processing for lawyers and law firms, the fees can be expensive. At the end, you will find a guide outlining relevant ethics rules and state laws. There are some legal options to remove the security interest, but they can get technical, so you may want legal help. Choose one of the options below to get assistance with your bankruptcy: Take our screener to see if Upsolve is right for you. To negotiate with your creditors, an attorney might charge: a flat fee per creditor (or debt) an hourly fee; a fee based on the amount of debt you have, or; a fee based on how much the settlement saves you. Implementing this online payment method means you can provide a client-centered, that also benefits your law firm business. How Long After Filing Bankruptcy Can I Buy a House? Our team includes lawyers, engineers, and judges. What does it mean to pass along credit card processing fees to clients? Weve seen discussions in the Law Community and other online forums, but whats the best option for your firm? Senate Bill 21-091, which quietly passed last summer but did not take effect for twelve months, has now lifted the prohibition on credit card surcharges for all businesses. There are multiple types of fees associated with each transaction, and fees can vary depending on the type of credit card accepted. Your bankruptcy costs, including attorney fees, will vary by the complexity of your case as well as which type of bankruptcy you choose to file. Other options are negotiating with creditors or engaging a debt settlement company to handle the whole process for you. firms should be familiar with prior to implementing either surcharging and discounting: card brand rules, state laws and the state rules of professional conduct. If a client wants to call in a credit card or make the payment while visiting the firm you can take the payment online through the credit card processor so you dont run the risk of having someone write down the number on a slip of paper at the firm. Can I accept payment for legal fees and expenses via a credit card? This means youll pay a portion of the fees each month for the duration of your Chapter 13 plan, which is usually 3-5 years. In general, there are four ethical questions surrounding credit cards for law firms: In addition to these considerations, lawyers must also ensure that their state permits them to accept credit cards. Although the math is often more cumbersome to provide a discount versus a surcharge, this may still be a desirable choice for some businesses, especially those that sell bulk products at an advertised unit price, such as gas stations. Debt collectors can come after you if you have debt. If you hire an attorney to write a letter to the creditor, it can start the negotiation process. For lawyers contemplating using P2P (peer to peer) services including Venmo, Cash App, PayPal, Google Pay, and Apple Pay to obtain trust monies tread carefully and read the article Proceed with Caution: Person to Person Payment Applications. The short answer is probably, but there are certain rules and regulations to understand. 1 You raise section 604A.0021 of the Business and Commerce Code in particular and ask whether that statute prohibits charging such a fee. With reputable debt settlement companies, there are no upfront fees, and theyll handle the entire negotiation process with creditors on behalf of their clients. Currently, eleven states prohibit merchants - and this includes law firms - from pinning a surcharge onto credit card transactions. eChecks are only $2.00 per transaction with no hidden fees. Many customers have thus become accustomed to using credit cards for all transactions, and the notion of paying a separate surcharge may feel anachronistic. Client initials: _______ USE OF AUTHORIZED THIRD-PARTY CREDIT CARD charge is considered overhead to the lawyer and is not chargeable to the client. Taking credit cards from clients makes it easier for them to pay you and for you to process the payments. The credit card issuer might take out the wrong amount or bill you for something you didn't charge. Starting on July 2, 2022, all businesses in the statenot just government agenciesare allowed to charge their customers surcharges to offset the costs of credit card transactions. As with the prior version of the statute, a business could argue that a convenience fee for all online transactions is not a credit card surcharge per se, but a court might take a dim view of that theory in light of the recent statutory changes, which expressly prohibit surcharges in excess of 2% or what a merchant actually pays for processing. Legal fees for a bankruptcy lawyer arent treated any differently than attorney fees for other legal services in Chapter 7. Perhaps, youll conclude that youll surcharge clients. Firms that accept credit cards are paid 40 percent faster, according to 2017 Legal Trends Report by Clio. In conclusion, Colorado has aligned itself with the majority of states that permit businesses to impose surcharges on customers who use credit cards. When it comes to credit and debit card processing for lawyers and law firms, the fees can be expensive. Let us help reduce the cost and improve the client experience associated with accepting payments. Debt settlement companies can offer similar services and only charge a percentage of your enrolled debttypically, 3%5%. ACH fees are often lower than credit card processing fees. This guideline means you cannot profit from surchargesyou can only charge the processing fee. Confirm that the charge warrants disputing. You get the benefit of an automatic stay to stop collections, including serious measures like wage garnishment or foreclosure. We have world-class funders that include the U.S. government, former Google CEO Eric Schmidt, and leading foundations. The DRB decision noted at least a dozen more charges made by Kokabi. Like we mentioned, credit card surcharges are not always legal. A credit card surcharge (or cc surcharge) is a fee enforced by the merchant to compensate for some of the cost of payment processing.