What if you can’t afford to file bankruptcy?
Believe it or not, it’s a question a lot of people ask when they’ve run out of options.
Filing bankruptcy, can be an expensive process, especially if you don’t have any money left. Below are some example of the fees you can expect when filing with the U.S. Court (not including attorney fees).
Chapter 7 Fees
Case Filing Fee: $245
Admin Fee: $75
Trustee Surcharge: $15
Chapter 11 Fees
Case Filing Fee: $1,167
Admin Fee: $550
Chapter 13 Fees
Case Filing Fee: $235
Admin. Fee: $75
Bankruptcy Attorney’s Fee
By far, the largest expense will be attorneys fees. Lawyer fees are not set by the courts, but attorneys limited to how much they can charge – for each case, attorneys must disclose their fees. The U.S. Trustee’s office in each jurisdiction reviews fees to make sure they are reasonable, and an attorney who charges unreasonable fees can be required to return those fees to clients.
Beyond that, attorneys fees vary depending on what type of case you file and where you live. It will also depend on whether you have business debts. In some cases, attorneys will charge more for a married couple filing together than a single person filing alone.
Some attorneys charge a base amount, then add fees for clients who have more creditors than average. There are attorneys who will allow you to pay in installments. In Chapter 13 cases, most attorneys will take their fee as a part of your Chapter 13 plan payments.
You’ll probably end up paying an attorney anywhere from $800 – $5,000.
Chapter 7 vs. 13 Bankruptcy Cost
The National Bureau of Economic Research (NBER) estimated that the cost to file a Chapter 7 bankruptcy averaged $1200. But, what you end up paying also depends on the state you reside, the specifics of your case, and your attorney. The highest average attorney fee was $1,530 in Arizona, and the lowest was Idaho at $692.
Chapter 13 cases, which take longer and are more labor intensive for attorneys, cost more. Nationally, the average attorney fee in a Chapter 13 case is $2,564, with the highest average in Maine ($4,950), and the lowest in North Dakota ($1,560).
Credit Counseling, Debtor Education Fees
Before you can file a bankruptcy case as an individual, you are required to take a credit counseling course. The course can be in person, online, by phone or email.
Most course providers charge a fee. Likewise, to obtain your discharge in a Chapter 7 or a Chapter 13 case, you have to take another course that covers financial education. That course, too, will carry a fee. The fees are set by the providers and cost about $50. Some providers offer both courses for one price.
If your income is less than 150% of the poverty line, you have a medical hardship or your qualify for a waiver of your court filing fee, you may qualify for a waiver of your counseling and debtor education fees as well, but you must request the fee waiver from the provider before you start the courses.
Bankruptcy Petition Preparers
There are of course ways that you are able to file your own bankruptcy case, without the help of an attorney. The bankruptcy court costs will still be owed and you’ll save money on lawyer fees, but by filing on your own, you will be at a disadvantage.
If you choose to go this route you’ll still need a bankruptcy petition preparer (or BPP) to produce a the actual documents needed to file in U.S. bankruptcy court. Fees for a BPP are typically $150 – $300.
In a Colorado case, the bankruptcy judge held that a BPP’s fee of $499 was excessive, and that anything more than $200 for a Chapter 7 case may be unreasonable.
It’s important to note that a bankruptcy petition prepare is not a cheaper type of attorney. They can not provide legal advice, cannot help you choose your exemptions, cannot help you determine if you qualify for bankruptcy, cannot tell you what info you need to include on the schedules or even which schedules you need to file, cannot advise you on reaffirmation agreements or motions to lift the automatic stay, and cannot answer the dozens of questions you will have about how the bankruptcy system works.
Filing for bankruptcy is a big decision and it’s highly recommended that you hire an experienced attorney to help you through it.