July 23, 2019

How Much Money Does it Cost to File for Bankruptcy Protection?

If you are drowning in debt, bankruptcy protection may be your lifeline. Compare the costs of your current situation to the fees necessary to discharge your obligations and re-launch your life.Yes, it costs money to file for bankruptcy protection. This post covers court costs and legal fees related to Chapter 7, Chapter 13 and Chapter 11 bankruptcy cases.

Too often, I counsel folks who qualify for bankruptcy protection who’ve been spending their money trying to avoid filing. They spend it on so-called debt relief programs; they spend it trying to keep their home out of foreclosure, and make every attempt to maintain a lifestyle they can no longer afford.

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Begin with a bankruptcy counseling session

So how much does it cost to file for bankruptcy protection? First, it costs nothing to explore whether you’re a candidate for bankruptcy protection.

I offer an initial bankruptcy consultation to potential clients that we speak to on the telephone and determine may benefit from discussing a bankruptcy case; there is no charge for our initial bankruptcy consultation unless you retain me to perform legal services for you. If  you retain me, you’ll pay for the session and bankruptcy services as (generally) follows:

Chapter 7 attorney’s fees vary from office to office, are usually a flat fee, and are based on a variety of factors, including the complexity of the case, the experience level of the attorney, whether there is one debtor or co-debtors (typically, a husband and wife who both need to file), whether the debtor is self-employed, and whether the debtor owns significant property or is involved in multiple lawsuits.

I generally charge a minimum attorney fee of $2000.00 for a simple Chapter 7 bankruptcy case; fees increase based on the complexity of the case. I require that both the filing fee and the entire attorney’s fee be paid, in cash or certified funds, prior to the filing of the petition. I occasionally handle a Chapter 7 bankruptcy filing on an hourly fee basis, where it is hard to predict how much legal work will be required throughout the bankruptcy case.

Chapter 13 attorney’s fees are set by the bankruptcy court, and are a flat fee of $3750.00 for base fee services – a defined set of usual work done in Chapter 13 cases.

In a Chapter 13 case, unusual work, known as “non-base fee” work, is usually charged at a separate hourly rate agreed to by the client and the attorney prior to the bankruptcy filing. Most attorneys require that a portion of the $3750.00 base fee be paid prior to the bankruptcy filing, with the remaining fee included in the monthly plan payments made by the debtor to the trustee.

Chapter 11 attorney’s fees vary from attorney to attorney, and are generally provided at an hourly rate (not a flat fee rate). Chapter 11 attorney’s fees generally cost at least $15,000.00 over the life of the case.

I generally require an advance fee deposit of at least $10,000.00 to file a Chapter 11 case, and will require additional deposits or payments during the life of the case, as needed.

Bankruptcy Court Costs

Filing fees charged by the bankruptcy court is as follows:

  • Chapter 7–$335
  • Chapter 11–$1717
  • Chapter 12–$275
  • Chapter 13–$310
  • Chapter 15–$1213

As you see, many costs are set by the courts, so the question to ask when trying to find a practitioner or firm you is whether they have the change expertise to experience and ability expertise for your situation. After that, consider the “people skills” of the legal team — financial problems are stressful.