Thursday, 3 October 2019

How Much Does It Cost To File Bankruptcy

Cost To File Bankruptcy

One of the questions that people ask about bankruptcy is how much does it cost to file bankruptcy. The answer depends upon whether you file a chapter 7 or chapter 13 bankruptcy. One of the costs you incur in filing bankruptcy is a bankruptcy filing fee.

Bankruptcy Filling Fee

  • Chapter 13: $1500 and $3,000
  • Chapter 7: $299

Let's start with chapter 7

If you file a chapter 7 bankruptcy, the following fee that you must pay to the court is $299, whether the file is an individual or if you file jointly. There are other costs you will incur in addition to the filling offenses. For example, you are likely to incur a cost for asset verification. Under the new bankruptcy law, attorneys must do some sort of verification of your assets.

Many attorneys will use services or third parties to do some form of verification, those costs are typically passed on to the client, and those vary, usually, the varying factors whether you are an individual filing because less work and less examination are necessary.

  • If you file jointly, the asset verifications rate goes up just a little because now there is an asset check on two people as opposed to one. So, be aware that there are other costs in addition to the filing fee.

Fee Structures

  • Fixed Fees
  • Variable Fees

The next thing that you need to look at are the attorney's fees, obviously different attorneys charge different fees, there are basically two fee structures that you will encounter when looking at chapter 7 or chapter 13 bankruptcy as a consumer.

There are fixed fees that you pay once, and you get your chapter 7 done or you get a chapter 13 done. 

There are variable fees, the variable fee has an introductory rate and then increases based upon different thing for example after you hit a number of creditors the rate goes up. You need to be aware of these variable fees because ususally they are based upon a low introductory fee to get you in or bait you. And then they go up based upon the number of creditors and often you can encounter a situation where the number of creditors at the introductory rate is almost high.

Very few people would qualify just for that rate, so, expect your rate to go up if you are going to have a variable fee.

I recommend that when you look into filing bankruptcy and you look at attorney's fees, look for an attorney that has flat fees, this is a fixed fee. You know what it's going to cost, it's not going to be variable.

Beware about these variable fees, 

Chapter 13 Bankruptcy

First of all, we can talk about chapter 13 which is a reorganization of your debts. The attorney fee is generally anywhere between $1500 and $3,000. But, all of the attorney fees are paid in the chapter 13 plan.

The attorney fees are no money down and it's generally spread out over the term of the chapter 13 plan. As far as attorney fees in chapter 13, they are awarded by the bankruptcy judge and they are to be paid by the chapter 13 trustee while you are in the chapter 13 plan, with your other creditors.

Now you learn how much it cost to file for bankruptcy.

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