Are you currently in a financially undesirable situation? Do you have to know the cost of filing for bankruptcy because it’s your best bet? You’re not alone in this.
A lot of people are currently wondering how to afford bankruptcy since they can no longer keep up with their payment schedule. To solve this issue, we’ve intuitively created a free bankruptcy cost estimator to assist in a proper estimate of what it’ll cost you.
By reading this article to the end, you’re bound to learn the following:
- A specific and detailed estimate of your bankruptcy expense as determined by your zip code/ city and according to the complexity of your case.
- The nitty-gritty involved in filing for a bankruptcy discharge.
Let’s begin the discussion with your bankruptcy cost estimate; after that, we’ll describe everything that goes into the cost. There is also information on how you can secure bankruptcy consultation with the local attorney for free–that sure will be helpful to some.
Understanding the Variable and Fixed Costs of Filing for a Bankruptcy Discharge
In filing for bankruptcy, there are costs that you’ll incur. And these are both variable costs and fixed costs. The variable cost here includes the attorney fee, while the fixed cost includes the administrative and filing fees. We’ll elucidate on the fixed cost. To have a full understanding of the cost implication, we’ll recommend that you use our bankruptcy cost estimator to calculate the cost implication for your city of residence.
Variable Costs: The major determinant of the variable cost is the attorney fee. In our latest article on bankruptcy attorney fees, we elucidated on the factors that determine the exact cost of bankruptcy fee these are:
- The bankruptcy type
- The difficulty of the bankruptcy case
- Your state of residence
- The level of expertise of the attorney
- The attorney’s level of involvement in the case.
Fixed Costs: Information for this has been provided by the US courts (Check here and here). For chapter 7 bankruptcy, the filing cost that you’ll pay is $338 ($245 is the filing fee, $78 is the administrative fee, while an extra $15 is for the trustee surcharge). As for Chapter 13 bankruptcy, the total filing fee is $313 (breakdown if $235 for the filing fee, while the administrative fee will be $78). If you need help with accountancy issues, then speak to Fortress Accounts. They have over 20 years of experience in the industry and are available to help with all accountancy issues. Sometimes you don’t need to file for bankruptcy, you just need an expert to help guide you through the process of assessing your financial situation to see where you are losing money.
Understanding the Differences and Cost in Chapter 7 and Chapter 13 Bankruptcy
Of all the bankruptcy types, the two most prominent are Chapter 7 and the Chapter 13 bankruptcy. The cost of filing one differs from the other.
Chapter 7 bankruptcy is significantly less expensive than Chapter 13. Its aim is primarily liquidation, and it can help to get rid of all your unsecured debt. Some of the debts get rid of our credit card and medical debt—the debtor no longer has to pay these debts once they get a discharge from these.
However, you can’t get a Chapter 7 discharge unless you qualify for it. The primary way to qualify for this discharge is by passing the Chapter 7 means test. The means test is a qualification model whereby a debtor’s earnings has to be below a certain income limit–according to the debtor’s household size and state.
Chapter 13 bankruptcy costs way more than Chapter 7 bankruptcy. Chapter 7 is mainly for individuals that can’t pass the Chapter 7 means test, and they have enough money to make monthly debt payments that’ll be decided by the bankruptcy court.
Is Chapter 7 Bankruptcy Affordable?
To be clear, there is such a things as an affordable Chapter 7 bankruptcy. The first is by surveying the estimated fee charged by bankruptcy attorneys in your state. The second way is by negotiating for a reduced fee with your attorney. The third is by requesting that your attorney agrees to a payment plan.
However, if you don’t have excess money to file for attorney fees, you can opt for legal aid and filing fee waivers. Some individuals are already filing Chapter 7 bankruptcy without the service of an attorney–you may consider this option.
How Much Will it Cost Me to File Chapter 7 Bankruptcy?
Let’s elucidate the costs attached to filing under Chapter 7 bankruptcy. The majority of applicants hire the service of an attorney, so we’ll factor this into the article. You should note that the attorney’s cost will be the most expensive of your cost. To have a better understanding of the cost as it pertains to your case, then it’s best to use our Chapter 7 bankruptcy cost calculator.
Let’s discuss each cost below:
1. Chapter 7 Bankruptcy Attorney Fees ($500-$3000)
This is often the highest cost when you’re filing for a bankruptcy discharge. Many authority sources believe that the average attorney fee for a consumer Chapter 7 bankruptcy ranges between $500 and $3000. However, a Chapter 7 business attorney will cost between $2,000 and $5,000. The exact figure depends on a multitude of factors–this includes the attorney’s location, their experience, and the simplicity of the case.
Do bankruptcy attorneys accept payment plans?
Luckily, there are many bankruptcy attorneys that accept scheduled periodical payments. However, they may charge a small amount of money for payment plans. Also, some attorneys accept Hyatt/Metlife Legal payment plans.
Lastly, a number of bankruptcy attorneys give prospective clients free consultations. You should hold discussions with a number of Chapter 7 bankruptcy lawyers to discover one that provides a payment plan and charges a reasonable legal fee.
No law makes it compulsory to hire an attorney to assist with filing under Chapter 7 bankruptcy. There are multitudes of pros to hiring a bankruptcy attorney to advise with your legal rights and educate you on the options at your disposal. Nevertheless, you’re at liberty to file without a bankruptcy attorney.
2. Bankruptcy Court Filing Fee ($335)
Every individual that aims at filing under a Chapter 7 bankruptcy discharge is mandated to pay the sum of $335 as the filing fee. Beyond this, there’s an additional charge ranging between $15 to $20 that’s to be paid to the Bankruptcy Trustee.
The filing fee charged by the bankruptcy court is uniform to all bankruptcy cases, irrespective of the case complexity, the amount involved, and whether it’s a business, joint, or individual case. The total sum of a Chapter 7 bankruptcy fee is $335, out of which $15 is the Trustee fee, while the administrative fee is $75.
Here’s a breakdown of the cost:
You can request that your Chapter 7 bankruptcy filing fee should be waived. However, what determines whether your request will be granted or not is your income. To get a fee waiver, then the income for your household should be below %150 of the government stipulated poverty line as at the time you’re filing for a discharge.
However, if your income does not fall below the requirement for a fee waiver, then you should request an instalment payment. Before you’re allowed to make an instalment payment, then you must fill the form that allows you to pay your filing fee in instalments. In an instance where the bankruptcy court approves your instalment request, then you must make all payments in four instalments–at most. Also, you won’t be issued your bankruptcy discharge certificate if you haven’t paid your filing fee in full.
3. Credit Counseling Fees ($10-$50)
It’s mandatory that all consumer debtors complete a credit counseling course before they file for bankruptcy. This course has to be done within 180 days prior to filing your Chapter 7 bankruptcy case. The course can be done via telephone, in person, and online. However, it’s mandatory that you only do the course with a company with approval from the United States Trustee’s Office.
You can complete the case online in an hour.
Averagely, you’ll be charged between $10 to $50 for your credit counseling course. You can find a company with a low rate by shopping through the list of approved companies. You may get a fee waiver for your credit counseling course if you meet specified income requirements. However, the processes involved in getting a fee waiver differs from company to company.
4. Credit Report Fees ($0-$20)
You’re to list all your creditors on given bankruptcy forms. It’s best to surf through your credit report and ascertain that you’ve included all collections agencies and creditors.
You can get copies of your credit reports from the three major credit reporting agencies for free on a 12-month basis. You may also get your attorney to help you here.
5. Debtor Education Course ($10-$50)
After filing a petition for Chapter 7 bankruptcy discharge, you’re mandated to complete a second course on chapter 7 bankruptcy. This course, which is called a debtor education course, must also be conducted by an approved company. Most companies offer options for online courses, telephone courses, and one-on-one interviews. The court may not issue you a bankruptcy discharge if you don’t complete the bankruptcy education course and notify the court of completion before the given deadline.
The fee for the debtor education course also varies from $10-$50. A good number of companies will give you a discount if they conduct the two courses.
6. Miscellaneous Costs ($0 – $100)
You should factor in miscellaneous costs in your Chapter 7 bankruptcy cost. Let’s say you filed for a Chapter 7 bankruptcy case without hiring an attorney; then, you’ll have to cover the cost of making copies, sending posts, and transportation expenses that may include parking fees.
You’re mandated to attend a minimum of one bankruptcy hearing. And based on your location and its proximity to the bankruptcy court, you may be incurring high costs. You may have to pay parking fees.
Cost to File Bankruptcy in Your State
While the filing fees are a federal cost, you should also understand the cost to file bankruptcy in your state if you decide to hire an attorney. Please see the table below that has the bankruptcy attorney cost range estimate for your state and the sources for you to check the costs yourself.
Wyoming: $1100 – $1500
Wisconsin: $1100 – $1500
West Virginia: $1000 – $1500
Washington: $1000 – $2000
Virginia: $800 – $1500
Vermont: $400 – $900
Utah: $1170 – $1500
Texas: $800 – $2000
Tennessee: $1000 – $1500
South Dakota: $1100 – $1400
South Carolina: $1000 – $2800
Rhode Island: $1100 – $1500
Pennsylvania: $1000 – $2000
Oregon: $1170 – $1500
Oklahoma: $800 – $1500
Ohio: $1090 – $1500
North Dakota: $1170 – $1450
North Carolina: $900 – $1550
New York: $1170 – $1950
New Mexico: $1170 – $2000
New Jersey: $1000 – $2800
New Hampshire: $1200 – $1500
Nevada: $1170 – $2000
Nebraska: $800 – $1200
Montana: $1399 – $1700
Missouri: $1075 – $1400
Mississippi: $1170 – $1500
Minnesota: $1170 – $1450
Michigan: $1000 – $1500
Massachusetts: $1150 – $2500
Maryland: $899 – $2000
Maine: $1100 – $1500
Louisiana: $800 – $1500
Kentucky: $1170 – $2000
Kansas: $1075 – $1500
Iowa: $1170 – $1500
Indiana: $1000 – $1400
Illinois: $1075 – $2000
Idaho: $1170 – $1500
Hawaii: $1170 – $1500
Georgia: $1000 – $2000
Florida: $1000 – $3000
District of Columbia: ~$1800
Connecticut: $1150 – $1650
Colorado: $800 – $2000
California: $900 – $2000
Arkansas: $800 – $1500
Arizona: $925 – $1500
Alaska: $1100 – $1500
Alabama: $1170 – $1500
Sum Up Your Cost of Filing Bankruptcy
Before taking steps to file for bankruptcy, it’s sacrosanct that you carry out a detailed review of your financial standing. There are many reasons someone chooses bankruptcy, but it’s best to also evaluate available alternatives. Doing these helps you understand available options and check which suits you best.
Companies and individuals wanting to file under a Chapter 7 bankruptcy discharge must consider a number of options before doing so. We designed a detailed Chapter 7 calculator to check if you’ll be issued a discharge or not. There’s also a Chapter 13 calculator to use–if you’d rather opt for that option.