Until 1980, sanctions imposed pursuant to § 1927 were limited to excess costs and expenses, which rarely involved significant sums. And, as a result, these sanctions were seldom the subject of litigation. Since 1980, when Congress amended the section by authorizing the inclusion of attorney’s fees as part of the sanction, much greater use has been made of § 1927. And now, a split has arisen amongst the federal appellate courts as to whether a district court may consider an attorney’s financial status when issuing monetary sanctions under this section.In 2009, the Seventh Circuit held that district courts may not consider the sanctioned attorney’s ability to pay. The Seventh Circuit stands alone in its affirmative prohibition of consideration of an attorney’s financial status by the district court in its calculation of § 1927 sanctions. Four other federal appellate courts have held that district courts may, but are not always required, to consider an attorney’s ability to pay when determining an appropriate award under § 1927. Most recently, in Haynes v. City & County of San Francisco, 688 F.3d 984 (9th Cir. 2012), the Ninth Circuit held that district courts may consider the financial status of the sanctioned attorney and explicitly rejected the Seventh Circuit’s reasoning to the contrary, drawing attention to the split.The circuit split creates substantial inconsistencies across the five circuits discussed above and uncertainty in jurisdictions where the courts have not yet determined the extent of the penalties that a district court may impose on an attorney pursuant to § 1927. And, as one commentator noted, “[w]hile costs will never grab the headlines in the way that affirmative action, same-sex marriage, and other cases in the Supreme Court’s current inbox will, they have gotten the Court’s attention as a day-to-day part of litigation that affects many people.” Accordingly, it is reasonable to project that, if appealed, the Supreme Court might grant certiorari in Haynes or a similar case.I analyze these five federal appellate cases, concluding that the First Circuit’s rule, which requires district courts to consider an attorney’s ability to pay when imposing sanctions for deterrence purposes, appears to be the most sensible way to accommodate the section’s plain language, dual purposes of deterrence and compensation, and the potential policy ramifications because it acknowledges the wide discretion given to the district courts by the statute but also places procedural safeguards that make explicit the district courts’ bases for their awards. I further conclude that district courts should consider coupling the imposition of monetary sanctions with referrals to state bar associations. This would better ensure that incompetent lawyers are counseled out without using the blunt instrument of judge-imposed monetary sanctions to drive these lawyers into bankruptcy.