How Much Does Bankruptcy Cost?

When you are thinking of filing for bankruptcy, you don’t have much spare cash lying around to pay expensive filing fees. Unfortunately, it still costs money to file for bankruptcy. Some filers can put off the fees by having the bankruptcy court costs deducted from their assets. However, there may be other bankruptcy costs, including filing motions with the court, amendments, or administrative fees.

The average cost of bankruptcy can be anywhere from about $700 to $5,000. If you have questions about how much it may cost for your bankruptcy case, talk to a bankruptcy lawyer for legal advice.

What Are the Costs and Benefits of Bankruptcy?

Filing for bankruptcy helps people struggling financially regain control of their finances. The process can be expensive, but it is money well spent for those seeking debt relief. There are ways to file for bankruptcy with the help of a bankruptcy attorney and minimize expenses.

There are different types of bankruptcy filings, depending on your financial situation. Chapter 7 bankruptcy is for individuals who are deep in debt and won’t be able to pay off the debt even with a payment plan. Chapter 13 bankruptcy is known as a wage earner’s plan and allows filers to pay off some of their debts with a repayment plan and discharge all of their remaining debts.

Bankruptcy starts with filing a petition with the bankruptcy filing fees. Whether you are filing a Chapter 7 or a Chapter 13, the bankruptcy case must be filed with the bankruptcy court. The process can be lengthy and confusing, which is why having legal counsel is advised.

A Chapter 7 filing releases you from all qualifying financial obligations. Some non-dischargeable debts include alimony, child support, and, for most people, student loans.

You must complete and promptly file several files and documents like a means test, a listing of all known creditors, a detailed listing of all your assets and their values, bank account records and balances, and other financial information.

Can I File for Free?

Technically there is no such thing as a free bankruptcy, but there are ways to reduce or include costs so that you don’t pay the fees at the time of filing. As of 2022, the filing fees for bankruptcy court are as follows:

• Chapter 7 bankruptcy: $338
• Chapter 13 bankruptcy: $313

In some cases, you can get a fee waiver if your income is less than 150% of the federal poverty line, or you can pay in installments.

The other expense is the attorney fees. There is a cost involved in producing documents, filing the documents, paying the court filing fees, and consultations to review your case and ensure everything is in order. The legal costs can depend on the complexity of your case.

If you’re looking to save money on these fees, you could look for an attorney who does pro bono bankruptcy cases. The local Legal Aid office can put you in touch with a free or low-cost attorney in the area.

People seeking bankruptcy protection are having financial difficulties, so it is no surprise that filing and attorney fees might be challenging. But it is still wise to speak with a legal professional before filing a case alone. Receiving guidance on how to proceed in filling out and filing required documents and what to bring to the meeting with creditors will help a person prepare for your day in court.

Is It Worth the Cost of Filing Bankruptcy?

Defaulting on your debt won’t discharge you from debt, and it may take a long time before you can get a fresh start. With a Chapter 7 and Chapter 13 bankruptcy, you can get an automatic stay on collections or any legal action by creditors.

The court filing costs of bankruptcy can help you get a fresh start immediately after your debt is discharged. Discharge will erase most remaining unsecured debt, including credit card debt and medical debt. You can begin rebuilding your credit score immediately.

One of the benefits of bankruptcy starts before the bankruptcy process begins. Anyone filing Chapter 7 bankruptcy has to complete an approved credit counseling course within 180 days before filing. Before discharge, you also have to complete a debtor education course. This can help avoid future debt problems.

Do I Need to Hire a Bankruptcy Lawyer?

You may be able to go through the bankruptcy process on your own, but a bankruptcy lawyer can save you time and money. The bankruptcy code and bankruptcy laws can be complicated. Some bankruptcy lawyers will handle your case for a flat fee, and you may be able to make monthly payments for the bankruptcy attorney fees. If you have questions about the upfront costs of a bankruptcy petition, talk to a bankruptcy lawyer about your options.