Finance

How Much it Cost to File Bankruptcy

Cost to Declare Bankruptcy

Having a lack of general funds and declaring bankruptcy are very separate matters. Declaring bankruptcy is the actual legal process of confirming that you cannot pay back a debt or multiple debts to your creditors. It’s a bit ironic that the process of claiming you have no money would end up costing money but there are costs and fees involved with declaring bankruptcy such as filing fees and attorney fees. Those are the main aspects that are the largest chunk of the cost but there are other minor costs that will affect the cost of filing for bankruptcy.

Factors of Cost

There are many small fees involved with filing for bankruptcy but the largest factors of the price include, court costs, attorney fees, and filing fees.

The cost of declaring bankruptcy can vary depending on the type of bankruptcy and the complexity of your case. Here is an overview of the costs you can expect to incur when declaring bankruptcy:

1. Filing Fees: When you file for bankruptcy, you must pay a filing fee to the court. As of 2022, the filing fee for Chapter 7 bankruptcy is $338, and the filing fee for Chapter 13 bankruptcy is $313.
2. Attorney Fees: If you hire a bankruptcy attorney to represent you, you will need to pay their fees. The cost of hiring a bankruptcy attorney can vary widely depending on the attorney’s experience and the complexity of your case. Some attorneys charge a flat fee, while others charge by the hour. On average, you can expect to pay between $1,000 and $3,500 for a Chapter 7 bankruptcy and between $3,000 and $4,500 for a Chapter 13 bankruptcy.
3. Credit Counseling Fees: Before you can file for bankruptcy, you must complete a credit counseling course. The cost of this course can vary, but it typically ranges from $20 to $50.
4. Credit Report Fees: You will also need to obtain a credit report from each of the three major credit bureaus (Equifax, Experian, and TransUnion) before filing for bankruptcy. The cost of obtaining these reports can vary, but it typically ranges from $30 to $50.
5. Miscellaneous Costs: Depending on your specific situation, there may be additional costs associated with your bankruptcy, such as fees for additional court filings, appraisals, or other services.

It is important to note that if you cannot afford to pay these fees, you may be able to apply for a fee waiver or installment plan. Additionally, some nonprofit organizations offer free or low-cost legal services for individuals who are considering bankruptcy.

Additional Costs

When filing for an individual bankruptcy, the court often orders mandatory counseling classes. These are designed to teach money management and organization to avoid the same situation in the future. These classes typically don’t exceed $100. There are also smaller extra fees that get added on for anything from administrative fees to trustee charges. Budget for about $45 for these additional costs. By paying all these fees and costs, your debt will be discharged and you will be free of all debt that is covered by the current bankruptcy laws.

Ways to Save

Deciding not to hire a lawyer after much thought and consideration is a way to cut your costs by over 75%. It is still wise to consult with a lawyer before court and absorb as much information as possible before you represent yourself. This will not take as much time and therefore will be more affordable.

If you do decide to hire an attorney to represent you, consult with multiple attorneys to find the best one to fit your needs and budget. Hiring a less experienced attorney will save money and should still accomplish what you need one for.