How much does it cost to file for bankruptcy?

You may be considering filing for bankruptcy because you are struggling to repay all of your debts, but unfortunately, the process is not free. To file for bankruptcy, you will have to pay court fees, credit counseling fees, and likely attorney fees as well.

Chapter 7 vs. Chapter 13

The most common type of bankruptcy for individuals is Chapter 7, which wipes out debts after selling some assets and distributing the cash from the sale to creditors.

The second most common type of bankruptcy for consumers is Chapter 13, which allows the debtor to keep some valuable assets by agreeing to a repayment plan that lasts three to five years. For example, if the debtor wants to keep their home, Chapter 13 will allow them to make payments through a bankruptcy trustee, and they will be protected from any legal actions that creditors may take.

Costs of Filing for Bankruptcy

As of 2021, the fees set by the U.S. court are $245 to file a Chapter 7 bankruptcy and $235 to file a Chapter 13 bankruptcy. There is an additional administrative fee of $78 and (in the case of Chapter 7 filings) a trustee fee of $15.

Note: If an attorney or bankruptcy filing service claims that your bankruptcy can be filed for less than this amount, it is likely a scam.

These are the basic fees for filing. There may be additional costs for certain actions in your case. For example, there are additional fees to convert a Chapter 13 case to a Chapter 7 case, to reopen a bankruptcy case, or for returned payments due to insufficient funds.

The USCourts.gov website maintains a list of all bankruptcy fees.

Installment Payment Options and Fee Waivers

Generally, fees are due at the time of filing for bankruptcy, but you may be able to ask the court to allow you to pay the fees in installments or even waive them. To qualify for a fee waiver, you must demonstrate that you cannot afford the fees, even in installments, and your income must be below 150% of the poverty line.

The U.S. Department of Health and Human Services publishes federal poverty levels, which vary depending on the number of people in each household.

Required Credit Counseling Costs

Before you can file for bankruptcy, you must undergo a court-approved credit counseling session. You will also need to take a financial management course. These courses usually come with a small fee from the service provider.

Court costs are typically less than $50. Fee waivers and discounted rates are available based on household income.

The U.S. Department of Justice website contains a list of approved agencies in each state. Visit their websites to learn about the costs of the required bankruptcy courses.

Attorney Fees

Attorney fees vary widely depending on the state, the attorney, and the complexity of your bankruptcy case.

For Chapter 7 cases, the average fees range from $692 in Idaho to $1,530 in Arizona. Chapter 13 cases are usually more expensive, with average fees ranging from $1,560 in North Dakota to $4,950 in Maine.

Unless you are an expert in the rules of the court where you are filing, U.S. bankruptcy law, and federal procedures, you should expect to need an attorney to present your case. If you file on your own, be aware that judges and other court staff are prohibited from giving you legal advice.

Don’t let the potential cost of filing for bankruptcy intimidate you from this option. Many attorneys offer free or reduced consultations to help you determine whether you need to file for bankruptcy and to estimate the total cost of filing if you need to do so.

Meet

A number of lawyers offer free consultations to understand your options. You may be able to pay your lawyer in installments, but you need to be aware that lawyers may only spend the time you’ve paid for on your case. Once the prepaid amount runs out, you will need to make another payment to continue working on your case.

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References:

United States Courts. “Just the Facts: Consumer Bankruptcy Filings, 2006-2017.”

United States Courts. “Bankruptcy Court Miscellaneous Fee Schedule.”

United States Code. “28 USC 1930.”

U.S. Department of Justice. “Frequently Asked Questions—Credit Counseling.”

American Bankruptcy Institute. “The Consumer Bankruptcy Fee Study,” Pages 6-7.

United States Courts. “Filing Without an Attorney.”

Source: https://www.thebalancemoney.com/how-much-does-it-cost-to-file-bankruptcy-960058

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