How Much Does It Cost to File Bankruptcy?

How Much Does It Cost to File Bankruptcy?

When a person considers bankruptcy, a common question is how much bankruptcy costs.  There are several expenses associated with a successful bankruptcy filing.  Some bankruptcy fees depend on your income.  Your income will likely determine whether you file Chapter 7 or Chapter 13 bankruptcy.  Other bankruptcy costs depend on how much debt you have.  More or complex debt can lead to higher bankruptcy fees.  The most important factor when it comes to bankruptcy expense is hiring the right bankruptcy lawyer.  Some attorneys overcharge.  You might overpay if you do not know what to expect.  Let’s look at Chapter 7 and Chapter 13 bankruptcy attorney’s fees, court filing fees, and the required classes.  This will help you protect yourself from bankruptcy attorneys trying to charge too much.

What is a basic Chapter 7 bankruptcy? (Yes, you can almost certainly keep your home and car.)  

If you qualify for Chapter 7 bankruptcy, the process is very straightforward.  The goal is to discharge the debt and keep the assets.  This usually can be accomplished.  There are some debts that cannot be discharged.  Secured debt on assets you would like to keep, student loans, and some taxes are frequent considerations.  Most people are able to keep all their assets, including their home and car.  Check with the list of exemptions in your state.  There are some assets that might need some consideration before you file if they are not included in the exemptions. The value of most homes you live in and cars you drive is included in the exemptions in every state. In almost every case, people are able to keep their home and car.

How much are the attorney’s fees for filing Chapter 7 bankruptcy?  

Chapter 7 attorney’s fees vary from state to state, but a general range is from $1,000 to $1,500.  This can be made in payments to the attorney.  For example, in Nevada and Colorado, attorney’s fees are a little higher than they are in Arizona.  Filing bankruptcy in Las Vegas or Denver could cost a couple hundred dollars more than a bankruptcy in Phoenix.  Regardless of whether you are filing a Denver, Las Vegas, or Phoenix bankruptcy, however, the range of attorney’s fees is the same.

What is a basic Chapter 13 bankruptcy?

Chapter 13 bankruptcy is used for incomes well above the Chapter 7 guidelines, nonexempt asset protection, or financing debts that cannot be discharged, such as student loans.  In Chapter 13, a debtor will pay their disposable net income to the court for a number of months. After the payments, the rest of the debt is discharged.  The payments are whatever the debtor can afford.  Subtract expenses from income; pay what’s left.  The payments can be really small, and the debt discharged can be really big.  You do not have to repay all your debt!  In fact, you will likely repay little or no unsecured debt, just like a Chapter 7.  Chapter 13 is a much better plan in many cases.

How much are attorney’s fees for filing Chapter 13 Bankruptcy?

The attorney’s fees for Chapter 13 are set by the bankruptcy court.  Chapter 13 fees vary by jurisdiction, but every attorney eventually gets paid the same.  Some of the fees are paid by you to the attorney before filing.  The rest of the fees are paid by the trustee to the attorney from the payment plan after filing.

The real focus should be the amount of money you pay the attorney before filing.  After your up-front fees, the rest of the attorney’s fees will come from your plan payments instead of going to your creditors.  It is better for you to pay as little up front as you can.  Some attorneys will want $2,500 or more up front before taking your case.  A Denver or Phoenix Chapter 13 bankruptcy can be filed for as little as $500 up front through our site.  A Las Vegas Chapter 13 can be filed for as little as $750 up front.

How much are filing fees for Chapter 13 and Chapter 7 bankruptcy?

Filing fees for each case are about $300.  These fees can normally be paid to the court after filing.  The court offers a payment plan for payment of the filing fees.  It is much more difficult to get the fees waived, but it is possible.  After filing, you will not be making payments to any of your other unsecured creditors.  Payment of the filing fee through a payment plan should work for almost everyone.

What is a credit counseling class?

The credit counseling class is a quick overview of credit that is required by the bankruptcy court before filing a petition.  It can be taken online or over the phone.  The credit counseling class covers things like where to find inexpensive items and the real cost of credit.  There is only one class.  It lasts about an hour.  You are not required to learn anything.  You just have to take it.

How much does the credit counseling class cost?

A credit counseling class should cost about $50.  You can normally take the class through your attorney.  You will need an hour alone with an internet connection or a telephone.  If you need help finding an internet connection, the library can help.  You could even take it at your attorney’s office.  Finding the free hour is up to you.

What is a debt management class?

Much like the credit counseling class, the debt management class is required by the bankruptcy court.  It is a longer class, usually over an hour.  It can also be taken online or over the telephone.  The debt management class must be taken after you file bankruptcy but before discharge.  In the case of Chapter 13 bankruptcy, the class may not be taken for several months.  The bankruptcy court will send notice to make sure you don’t forget.

How much does the debt management class cost?

The debt management class also costs about $50.  The credit counseling class and debt management class can both be taken online.  Your attorney will help you register for the classes.

What if I need to file bankruptcy right away? It’s an emergency bankruptcy filing.  

Sometimes, you need to file bankruptcy right away.  This could be the case to stop a garnishment, foreclosure, or repossession.  A bankruptcy can be declared in just a few minutes.  The exhaustive documentation can all be done later.  Filing an emergency bankruptcy is a much more involved process.  The documentation takes several times as long.  Because of this, there may be a fee for emergency filing charged by your attorney.  These fees are usually about $500.

Can a friend or paralegal help me with bankruptcy?  

Some bankruptcy filings do not go as smoothly as planned.  This is why it is always a good idea to meet directly with your bankruptcy attorney.  Meeting with a paralegal in the bankruptcy office will not prepare you for bankruptcy.  The paralegal cannot represent you.  If there are additional hearings like a 2004 exam, reaffirmation hearing, redemption objection, presumption of abuse, conversion hearing, or any other number of objections or adversary proceedings, a paralegal is just not good enough.  Having a friend who claims to know all about bankruptcy help you with your documents is also asking for trouble.  Few attorneys will take a case started by a paralegal or messed up by a friend.

Friends and paralegals are going to charge something for their help.  The attorney’s fees to guarantee your bankruptcy is done right are just not that expensive for the assurance.  The attorney’s fees can be made in payments and are well worth it if someone gets interested in your case.

A number of cases are randomly chosen by the bankruptcy trustee for audit.  In this case, there will be a 2004 exam that could take several hours of an attorney hired by the government going over every line of your filing.  Your case could be chosen.  This is only one instance in which the amount paid to a bankruptcy attorney is worth more than completing the documents.  It is an insurance policy to defend against the government’s lawyers.  There really is no better value than a bankruptcy attorney.