Our team includes lawyers, engineers, and judges. Another strategy for offsetting credit card fees is to provide the client with a discount if they pay with means other than a credit or debit card (ACH for example). An attorney could also be helpful if the debt is tied up in bankruptcy proceedings or has been turned over for collection by a third party, such as an agency specializing in debt collections. Can Law Firms Charge Clients for Credit Card Fees in California? With this kind of arrangement, the attorneys' fees increase with the amount you save, which gives the attorney more incentive to get you the best possible settlement. The law firm doesnt absorb the expenseinstead, when clients use a credit card, they pay the fee required by payment processing companies. or has been turned over for collection by a third party, such as an agency specializing in debt collections. January 1, 2023. In this document, we provide an overview of both surcharging and discounting. The online fee may be different than a retail transaction because the card is presented to the cashier. If you owe outstanding attorney fees, thats a debt youll want to list. 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. Credit Card Surcharge: What it Means for Law Firms | Clio 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. How customers may react to surcharges for credit cards remains to be seen. The DRB decision noted at least a dozen more charges made by Kokabi. Airplane*. For more tips on surcharges and online payments for lawyers, visit our payments resource hub. Can Law Firms Charge Clients for Credit Card Fees in South Carolina? 5-2-212, Businesses may now charge credit card customers a surcharge up to either (i) 2% of the transaction price, or (ii) the actual costs the business pays for processing. If you cannot pay, the debt collectors may file a lawsuit against you to get a court order that forces you to pay off your debt. If youre looking for debt relief, you should consider a legitimate and established company like CreditAssociates. Can I Discharge Private Student Loans in Bankruptcy? Instead, businesses are required to inform consumers of the higher credit card price for a product or service by posting the higher price. Taking credit cards from clients makes it easier for them to pay you and for you to process the payments. 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. Most filers even see their credit scores improve. If you take cards for earned fees it is a simple decision-making process. You get the benefit of an automatic stay to stop collections, including serious measures like wage garnishment or foreclosure. Upsolve is a 501(c)(3) nonprofit that started in 2016. Payment of Flat Fee by Credit Card If a client pays a flat fee by credit card for work to be done in the future, then all of that payment must be placed in the lawyer's trust account. There are some legal options to remove the security interest, but they can get technical, so you may want legal help. Below we provide links to reference materials on states where surcharging is limited. Because so much sensitive information is being transferred across these networks, credit card processors are PCI-compliant and use advanced encryption methods to secure transactions. Organize and simplify your firms client intake process. Resources: Florida Attorney General; Georgia: Surcharge Prohibited: No; Resources: Georgia Attorney General; Hawaii: Surcharge Prohibited: No; Resources: Hawaii Attorney General; Idaho: Surcharge Prohibited: No; Resources: Idaho Attorney General; Illinois: Surcharge Prohibited: No; Resources: Illinois Attorney General; Indiana: Surcharge . 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 . If you hire an attorney to write a letter to the creditor, it can start the negotiation process. In addition to a court filing fee, you may also have bankruptcy attorney fees if you want legal advice to file your bankruptcy petition. Thus, in the example of the $100 widget, the business could not charge credit card customers an extra $2, but the business could advertise a price of $102 with $2 off for cash buyers. In addition, although it was not technically an exception, some merchants sought to avoid the old prohibition by charging a convenience fee or equivalent on all online sales, even for customers who paid by electronic check, debit card, or other means that did not involve credit card processing charges. The attorney listings on this site are paid attorney advertising. The old law only had two exceptions. No credit card fees from the merchant should ever be taken out of the trust account. What does it mean to pass along credit card processing fees to clients? I hereby authorize [insert firm name] to charge the balance due each month to pay the outstanding invoice or replenish the prepaid fee retainer, with such charge being made once per month on or after the ____ day of each month as necessary. Can I accept payment for legal fees and expenses via a credit card? Let us help reduce the cost and improve the client experience associated with accepting payments. Still, credit and debit cards are an increasingly popular way people pay for anything today, and legal services are no exception. 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. One bit of advice that is constant is take credit cards. Its important to note that you would incur attorney and bankruptcy fees through this option. The fee amount will typically depend on the number and type of creditors you have. CFPB Clarifies Limits on Pay-to-Pay, Other Debt Collector Charges - NCLC These companies specialize in negotiations with creditors and have likely helped thousands of others in a similar situation. Reputable debt settlement companies will provide free, no-commitment consultations to determine if theyre the right fit for you. The merchant services processor, also called a payment processor, can also charge a fee to facilitate the transaction. Often charged as a convenience fee, this recovery of payment fees is allowed in some states and not in others. Review your credit card statement for the transaction in question. This compensates for the credit card processing/interchange fees that businesses pay to credit card companies for using their payment network. This fee is based on monthly sales, not per transaction. Is it Legal to Charge Customers a Credit Card Processing Fee? The short answer is yes, but there are certain rules and regulations to understand. Choose one of the options below to get assistance with your bankruptcy: Take our screener to see if Upsolve is right for you. Something went wrong. Law firms need to approach such questions with a client-centered mindsetwhat would be the best outcome for your clients? Ultimately, your cash flow will likely increase. Therefore, it is difficult to estimate how much time it will take before work begins, and the time can add up quickly. For example, in New York, lawyers are allowed to pass along the transaction fee only if the client consents and the charge is nominal[2]. Anyone who has registered their car online is likely familiar with credit card surcharges. Lawyers can use charging capabilities to set up payment plans, create flexible billing options, and offer affordable options to clients. Debt settlement attorneys typically work with creditors to lower interest rates and debt payments so consumers can eventually settle their debts. Currently, eleven states prohibit merchants - and this includes law firms - from pinning a surcharge onto credit card transactions. If use of privately owned automobile is authorized or if no Government-furnished automobile is available. The cost of working with a debt settlement lawyer can vary but will typically be around $275 per hour, which can amount to thousands of dollars depending on the complexity of your credit card debt. In conclusion, Colorado has aligned itself with the majority of states that permit businesses to impose surcharges on customers who use credit cards. 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. If you sign an agreement with an attorney that allows them to place a lien on your property, youve essentially turned an unsecured debt into a secured debt. Cassie is a deputy editor, collaborating with teams around the world while living in the beautiful hills of Kentucky. Like we mentioned, credit card surcharges are not always legal. 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. The monthly fee may range from $9.95 to $20. The costs for credit card processing will depend on the merchant services provider that you choose. With some shopping around, you can get the best-priced plans that fulfill your merchant services needs. In most cases, the fee will be a specific percentage of the amount of debt the attorney will negotiate on your behalf. Unless one of the exceptions discussed above applies to you, once you receive your bankruptcy discharge, youll no longer have to pay outstanding attorney fees. Colorado Now Allows Credit Card Surcharges - Colorado Attorneys There are some exceptions to this, especially for attorney fees related to family court matters. Keep in mind, many bankruptcy attorneys offer free consultations, and you can use this time to get a sense of your options. If youre considering credit card surcharging, in addition to ensuring its legal in your state, you must determine which cards your firm will accept and which credit card processing software you will use. While in private practice, Andrea handled How To File Bankruptcy for Free: A 10-Step Guide. Just where do all these fees come from, and what can a merchant do to minimize them? These fees can vary from under 2% to more than 5%, depending on the processor and bank involved. More details are available on Visas website. What Happens to Your Tax Refund in Bankruptcy. How Much Debt Do I Need To File for Chapter 7 Bankruptcy? From several dollars for an ACH transaction to as much as 3% for some credit cards, these fees are significant. Attorney fees depend on what work will be done. A credit card surcharge (or cc surcharge) is a fee enforced by the merchant to compensate for some of the cost of payment processing. how difficult it will be to settle the debt. The process of credit card surcharging is complicated, and in some states, even illegal. As you know you cannot co-mingle funds from trust and operating accounts. This thread from the ABA GP|Solo discussion list explores the issues and lawyers discuss the pros and cons of this practice. Performance information may have changed since the time of publication. Or you may be dealing with old attorney fees that you cant afford to pay as you enter your bankruptcy case. Credit Card Surcharge: What it Means for Law Firms. Do You Have to Go To Court to File Bankruptcy? Some of the typical fee structures that lawyers use in debt settlement are hourly and fixed fees. For some clients, it's the peace of mind that comes from knowing that they won't be cheated and that their credit card fraud protection department is there for them. Can my law firm pass on charges for payment fees to my client? - CosmoLex But to get to that point, you may need legal help from an attorney, and that means paying attorney fees. Make sure the reporting from the processor is clear and includes all the information you need. Imagine youre at a local bakery, and you pay with a credit card. attorney or a collection agency entering into such a contract may charge a fee for the use of credit cards to pay those debts. Implementing this online payment method means you can provide a client-centered payment experience that also benefits your law firm business. Reorganizing Your Debt? The law firm doesn't absorb the expenseinstead, when clients use a credit card, they pay the fee required by payment processing companies. We published this blog post in November 2021. Credit Card Surcharge Laws By State Explained | LawPay She is passionate about economic development and is on the board of two non-profit organizations seeking to revitalize her former railroad town. The card brands (Visa, Mastercard etc.) This is especially true if you owe back taxes, medical bills, or child support payments. Surcharges are legal in some states but not all. You may have an interchange-plus scenario where the interchange and assessment fees are charged along with a flat monthly and per-transaction fee. charge is considered overhead to the lawyer and is not chargeable to the client. How to Dispute a Credit Card Charge - NerdWallet If an owner pays with a credit card, the Colorado DMV collects an extra fee to cover merchant processing costs. Perhaps, youll conclude that youll surcharge clients. If youd prefer to have negotiations and paperwork handled, working with a debt settlement company might be a better option. Learn how to avoid commingling, keep track of client funds, and protect, First year lawyer salaries can vary depending on a number of factorsread this blog post to learn more about the. The Ethics of Law Firms Accepting Credit Cards | Clio a fee based on the amount of debt you have, or. In the majority of states which do allow the processing fees to be passed along to the client, its required to get consent from the client in writing[1]. The surcharge must be disclosed and billed separately. 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. This is how a processor makes its money since it gets none of the interchange fees. //]]> Copyright 2023 MH Sub I, LLC dba Nolo Self-help services may not be permitted in all states. Its important that you do your research to ensure your jurisdiction allows credit card surcharges. Get a free consultation today to help you reduce the amount of debt you have. How can a law firm balance the costs associated with accepting credit cards while preserving the convenience to clients? 5 states where it's illegal to charge credit card processing fees One way to make sure that your credit card processor is set up to help law firms comply with the strict ethical guidance for trust accounting is to use a service that is specifically focused on serving the legal market. Additionally, most merchants (sellers or lessors) accepting credit cards will pay some sort of processing fee to their credit card processor. Can You LEGALLY Charge Clients for Credit Card Fees? Your use of this website constitutes acceptance of the Terms of Use, Supplemental Terms, Privacy Policy and Cookie Policy. What Personal Property Can be Seized After a Judgment? Some attorneys charge by the hour, while others may set flat rates for specific tasks. Here are a few red flags: Dont trust a lawyer who promises to get you a large sum from the court system (if it seems too good to be true, it usually is). In general, average fees can range from $500 to negotiate a simple credit card debt to more than $5,000 for more complex negotiations. 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. Consumers often file Chapter 7 and Chapter 13 cases. Can my law firm charge our clients for credit card processing fees? What states dont allow law firms to apply credit card surcharges? These companies could help you reach agreements quicker than going through an attorney, saving you time and money. Hourly rates are often in the $200 to $400 per hour range, while some lawyers may charge by the half-hour or quarter-hour. In surcharging, firms expose the cost of processing credit cards to clients and let them choose what payment methods to use. Using Credit Cards and Disputing Charges | Consumer Advice When filing bankruptcy, be sure to list all debts in your bankruptcy forms as required by the Bankruptcy Code. And once your case is processed and you receive a discharge, many of your debts are wiped away, and you can start with a clean slate. However, a debt settlement company can be an attractive alternative for those looking to reduce their debt without paying the high fees associated with a lawyer. We're the world's leading provider of cloud-based legal software. you will use. There has been a repeated refrain during the pandemic regarding the importance of getting the bills out and getting paid. 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. With the amendment, Colorado joins all but a small handful of states in allowing such surcharges. Can I pass a surcharge to my client to compensate for the processing fees charged by some credit card processors? Finally, there isGoogle Pay for Businessfor earned fees, but you have to set up a Unified Payments Interface ID with your bank. How much it will cost to hire a lawyer to negotiate with your creditors can vary significantly depending on your circumstances. But what should a NC lawyer know? If you are concerned with getting paid during the pandemic adding a credit card option may be a good decision. I give them a 5 star and highly recommend. , which can amount to thousands of dollars depending on the complexity of your credit card debt. Trying to overcharge customers with hidden fees is never a good look, so businesses should tread carefully (and speak with legal counsel) before imposing any charges that might be deemed illegal. The bill amounts you pay could vary each month. This is simply the cost of moving money in our society today. 1 You raise section 604A.0021 of the Business and Commerce Code in particular and ask whether that statute prohibits charging such a fee. Like any other type of attorney, debt settlement attorneys fees can vary depending on how much work or billable hours are required to complete the desired tasks. You might be using an unsupported or outdated browser. For questions about this article, please contact Jesse Howard Witt. Can I File Bankruptcy Even Though Im Unemployed? Convenience Fees: What Are They and Can You Charge One? Credit card processing fees are the fees that a business must pay every time it accepts a credit card payment. If you find yourself in this scenario you should consult with a bankruptcy attorney about your best next steps. The surcharge must be disclosed and billed separately. Because few people nowadays write checks, it's essential to enable clients to pay electronically. This is an important aspect of Chapter 13 bankruptcy because the attorney fees are usually higher than for Chapter 7 cases. Kimberlee Leonard has taken her professional experience as an insurance agency owner and financial advisor and translated that into a finance writing career that helps business owners and professionals succeed. There are many potential clients specifically looking to hire an attorney who accepts credit cards. Confirm that the charge warrants disputing. Below we provide links to rules and opinions that have limited the practice of both discounting and surcharging. The surcharge regulations outlined below only apply within the U.S. CreditAssociates, LLC, 5050 Quorum Dr., Suite 700, Dallas, TX 75254 2023 All Rights Reserved. While hiring a debt settlement attorney might be your first thought, its usually best to work with a debt settlement company. The Lawyers Trust Account Handbookfrom the NC State Bar has a great article (page 116) by Peter Bolac called Top Tips on Trust Account: Dos and Donts of Accepting Credit Cards. Merchants are not allowed to charge more than 4% of each transaction as a credit card processing fee. If your firm cannot absorb credit card processing fees, looking for a payment solution that offers eChecks, like Clio Payments, is a great alternative. That means that in most cases you can walk away from that debt at the end of your bankruptcy. Can You File Bankruptcy on Student Loans? 5-2-212, Businesses may now charge credit card customers a surcharge up to either (i) 2% of the transaction price, or (ii) the actual costs the business pays for processing. An alternative to credit card surcharges: eChecks with Clio Payments, Lets say absorbing credit card processing fees arent an option for your firm, but you also understand the benefits of not surcharging. firms should be familiar with prior to implementing either surcharging and discounting: card brand rules, state laws and the state rules of professional conduct. A convenience fee is a fee that a merchant charges a customer for paying in a manner that's not standard for the business (for example, by mail or over the phone with a credit card). Live Webinar | Legal Trust Accounting 101: Back to the Basics | June 8, 2023 | 2 pm (ET)REGISTER NOW, CosmoLex is part of the ProfitSolv suite of products Learn more, Canadian Bar Association Chooses CosmoLex As Exclusive Preferred Practice Management Software Learn more, Free Webinar - Fixing the Broken Link Between Your Billing and Accounting WorkflowsREGISTER NOW. What are the options and ethics to consider? Clients must know your credit card surcharging policy beforehand. To get the best possible experience please use the latest version of Chrome, Firefox, Safari, or Microsoft Edge to view this website. Still, LawPay charges users $20 per month for an account (Theoretically, customers can have an unlimited number of bank accounts connected to their LawPay account at no additional cost). An attorney could also be helpful if the debt is. The news rules make things tricky because your state may allow surcharges on credit cards, but a client might pay with a debit card. Common Debt Negotiation Attorney Fee Structures. Filing Bankruptcy to Deal With Your Student Loan Debt? Thinking about starting your own private law practice? See how they handle recurring payments, as well as other transactions such as ACH and e-checks. Some credit cards have strict regulations on the subject. You can send out your bills electronically and include a link to pay with a credit card. Last updated: February 10, 2022. Debit and Credit Card Rules and Statutes, Legal | Privacy Policy | GDPR | Subscription Agreement. It quickly becomes clear that not passing credit card processing fees on to clients is the best choice for them. Yes, certain lawyers can negotiate a debt settlement with creditors on your behalf. While this strategy can be economically similar to surcharging, it is viewed more favorably by the card brands, under state laws and by the rules of professional conduct. Second, it allowed businesses to offer cash discounts, notwithstanding the prohibition on surcharges. 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. Helped my friend with a bankruptcy filing using Upsolve. Credit card surcharges make it harder for legal clients to pay you promptly. 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. 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. To take advantage of the new law in Colorado, a business must include specific text on its website or in its storefront. Filing for bankruptcy could also significantly negatively impact your credit for 7-10 years. PDF Trust Account Manual Use of Credit Cards for Payments by Clients of The larger question is, Can attorney fees can be discharged in a bankruptcy proceeding? The answer to that question is generally yes. Attorney fees are usually treated the same as any other unsecured debt. By absorbing this expense, law firms practice a client-centered mindset and helping their businessby increasing cash flow and improving collection rates. 2023 Forbes Media LLC. Firms that accept credit cards are paid 40 percent faster, according to 2017 Legal Trends Report by Clio. a fee based on how much the settlement saves you. Dont expect them to go away any time soon. Featured in Forbes 4x and funded by institutions like Harvard University so we'll never ask you for a credit card.Explore our free tool. Talk to a credit card expert to see if your fees are more than what you should be paying. From several dollars for an ACH transaction to as much as 3% for some credit cards, these fees are significant. They can, and should, be included in any bankruptcy filing. Getting paid faster means youll most likely improve your firms collection rates. Perhaps, youll conclude that youll surcharge clients. If you don't want to hire an attorney to handle the entire negotiation process, you can ask the lawyer to provide an unbundled service. eChecks are only $2.00 per transaction with no hidden fees. In Chapter 7 bankruptcy you can walk away from prior attorney fees after receiving your discharge., If you file Chapter 13 bankruptcy, you can eliminate attorney fees you owe (other than to your current bankruptcy attorney) as well. Normal message and text rates apply. Consumer protection advocates protest that these fees can be deceptive, aren't standardized, and inhibit interstate commerce. IOLTAs and Client Trust Accounts 2. Your statement will list the merchant's name and also, typically, the location . If you decide to use P2P services for earned fees thisAbove the Law articledescribes some things to consider, like privacy settings and transfer limits. Her work has appeared on Business.com, Business News Daily, FitSmallBusiness.com, CentsibleMoney.com, and Kin Insurance. is it a good idea? For years, consumer advocates have beenfighting the card brands to allow businesses to expose the true cost of credit cards and help consumers make more informed decisions about which payment methods they use. The cost to process . When it comes to credit and debit card processing for lawyers and law firms, the fees can be expensive. 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.
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