How Much Does Bankruptcy Cost?

How much does it cost to file bankruptcy? Sadly, there is no easy answer. Though the expense of filing a petition to the court is fixed, what youll pay an attorney and how youll make the payments can vary widely, depending on who you hire, where you live and the complexity of your case.

Attorneys fees differ from case to case, judicial district to judicial district and state to state. Where you live can make a substantial difference in what you pay, but an even bigger factor is the complexity of your case. Like everyone, lawyers want to be paid for their time, and the more time your case takes to resolve, the more it will cost.

An American Bankruptcy Institute study using data from 2005 to 2009 revealed that the average national average cost was $1,072 for Chapter 7 cases with assets. The cost depends on where the case is filed.Chapter 7 fees ranged from a low of $781 to a high of $1,530 in Arizona.

The ABI study showed an average of $2564 for Chapter 13 cases, with ranges from from $1,560 in North Dakota to a high of $4,950 in Maine.

Myriad circumstances can add to the cost of a simple bankruptcy filing. Attorneys will charge more as the complexities grow, particularly if they require court appearances.

Attorneys almost always demand payment before service in Chapter 7 cases. They will often offer payment plans, but they wont proceed with your case until your fees are paid. That leaves you vulnerable to creditors trying to collect your debts while you try to raise money for the lawyer.

Those are just averages, and fees have likely increased since the survey was conducted. In Chapter 13 cases, judges will review attorneys fees unless they fall below a so-called no-look amount, which is a baseline considered reasonable in the jurisdiction where the case is filed. But in general, its a good idea to call or meet with several attorneys before choosing one to represent you. Bankruptcy-attorney fees are public record and can be accessed through the searchable federal PACER website. Though PACER charges a small fee for downloaded information, it can be money well spent.

The cost of living where you file will also impact what you pay. Lawyers in large metropolitan areas, like everyone else, have bigger expenses than those in more rural settings. The higher cost tends to raise all professional costs, and bankruptcy representation is no exception. Also, not all lawyers were created equal. Those with many successful years in the bankruptcy field will almost certainly demand larger fees than those with little experience.

It is a good idea to consider the complexity of your case when picking a lawyer. If you have few assets and not many debts, your simple case might not demand the sort of representation that someone with a diverse source of income, a fat folder of creditors and perhaps a suspicion of fraud, might need. In other words, not all bankruptcies are the same. Remember that mulling the sort of lawyer you might need.

Those with complicated cases might benefit from an experienced bankruptcy lawyer. If creditors challenge your financial statements and allege fraud, having an attorney able to navigate a complex case would benefit you. The same would be true for cases springing from medical debt, a fairly common culprit in bankruptcy filings.

One small fee that you mustnt forget covers credit counseling. Completion of two credit counseling courses is required for petitioners in both Chapter 7 and Chapter 13 cases. You must consult a nonprofit credit counseling agency to arrange to take the course. The Office of the U.S. Trustee, the federal agency that oversees the counseling requirement, sets reasonable fees for such courses at free to $50. The course can be taken in person or online.

Although everyone who files for bankruptcy protection has unmanageable debts, some applicants are worse off than others. Be sure to fully document your financial situation before consulting a bankruptcy attorney. If you are unemployed, a low-wage earner, disabled or elderly, you might be able to get a fee reduction.

Bankruptcy is a hard step to take, and recovering from it isnt easy. Though a successful Chapter 7 petition will discharge your debts, it will remain on your credit report for as long as 10 years, affecting your ability to borrow. A Chapter 13 resolution might not be as damaging, but it will require that you stick to a repayment plan for three to five years, even if the court reduces your debts.

Given the consequences, discussing a disability or your advanced years with an attorney can help. Obviously, if there are impediments to rebuilding your finances after bankruptcy, that is relevant and an attorney might be willing to reduce fees to mitigate the damage bankruptcy is certain to cause.

In most instances, bankruptcy attorneys charge a flat fee, meaning they will tell you before starting work on your case what it will cost. In Chapter 7 cases, theyll want the money up front; in Chapter 13, they often demand just a portion of the fee to start the case, and will take the remainder through the court-approved bankruptcy settlement plan.

If legal representation costs more than you can afford, you might consider representing yourself and either file the paperwork on your own or seek help from a bankruptcy petition preparer. Petition preparers, also known as typing services or paralegals, are non-lawyers who will generate the necessary court filings. Unlike lawyers, petition preparers cant offer you legal advice, nor can they guide you in deciding which type of bankruptcy to file or what property and assets to include or exclude from your filing. They primarily offer a clerical service that leaves the decision making to you.

Since many legal forms are available online, petition preparers might have little to offer since they wont guide you through the process or offer legal representation. If you dont have internet access, they might be valuable, but you should understand their limitations before using their services.

Before deciding to handle your own bankruptcy without a lawyer, consider the consequences. The chances of running into trouble that might result in your case being dismissed are considerably greater if you dont use an attorney.

Filing for bankruptcy will cost you even though youre in no position to pay. Yes, in perhaps the ultimate Catch-22, youll need money to let your creditors know you dont have any.

Though covering the cost of bankruptcy might not be the largest problem on your agenda, it is an issue. Most bankruptcy petitions require some form of legal help, and the more complicated the filing, the more help youll need. That means hiring a lawyer, and unless you know one who works for free, it will require money.

Legal fees are the biggest headache, but not the only one. Youll also have to pay court costs and a fee for mandatory credit counseling. The combined bill could run into the thousands of dollars, so before you load up your briefcase and head for the courthouse, you need to know what you need to do, how much it will cost and where youll find the money.

Originally posted here:

The Cost Of Bankruptcy - Debt.org