Cost Breakdown for Filing Bankruptcy: A Complete Guide
This comprehensive guide outlines the costs associated with filing bankruptcy, including court fees, attorney charges, mandatory courses, and factors affecting overall expense. It helps debtors understand their financial obligations and options, ensuring better preparation for the bankruptcy process.
Cost Breakdown for Filing Bankruptcy: A Complete Guide
Filing for bankruptcy is a legal process designed to help individuals and businesses eliminate debt when repayment becomes impossible. Fees for submitting bankruptcy cases are standard, but the total cost can vary due to case complexity, location, and legal fees. Here's an overview of the typical expenses involved in bankruptcy filings.
Chapter 7
This chapter is suited for those overwhelmed by unsecured debts who cannot afford repayment.
Filing Fees
The court filing fee for Chapter 7 is approximately $300.
There are options to reduce this expense. You can request installment payments, which must be completed within 120 days after filing. Alternatively, those earning below 150% of the poverty line can apply for a fee waiver, subject to court approval. If denied, the court may still allow payment in installments or require full payment upfront.
Legal Fees
Attorney fees vary depending on case specifics like unsecured debts or property holdings. Costs typically range from $1,000 to $1,500. Many lawyers accept installment payments, but full payment is often demanded due to the automatic stay—an order stopping creditors from collection efforts, lawsuits, or calls.
Chapter 13
Designed for those with steady income, Chapter 13 involves creating a repayment plan to settle debts over time.
Application Fees
The filing fee for Chapter 13 is around $300. Unlike Chapter 7, fee waivers are generally unavailable, and inability to pay could complicate the approval process. Payment in installments is accepted.
Legal Costs
Because Chapter 13 cases often last several years and involve complex repayment arrangements, legal fees tend to be higher. Some attorneys require an upfront retainer, with remaining costs included in monthly payments that cover credits to creditors. Hourly fees are common, and detailed fee disclosures are required.
Mandatory Bankruptcy Courses
Both chapters require debtors to complete two educational courses: one credit counseling session before filing to determine if bankruptcy is necessary, and a debtor education course afterward to improve financial management. These courses, available online or in-person, cost about $50 each.
Additional Expenses
Other factors influencing bankruptcy costs include income sources, assets owned, number of creditors, past bankruptcy filings within eight years, allegations of fraud, or ongoing legal actions like evictions or bank levies.
