Costs to cover while filing for bankruptcy

Costs to cover while filing for bankruptcy

Filing for bankruptcy is a difficult step that can have high emotional and financial tolls. Before going ahead with such a decision, knowing the costs and types of processes involved is crucial. While you will be able to get a lot more subjective information from your local attorney, this article will keep you aware of the expenses that arise along the way. Here are the basic fees that come with filing for bankruptcy.

The most common types of personal bankruptcy filing process of the United States Code are Chapters 7 and 13. The major difference between these two chapters is that an individual filing for Chapter 7 will have to qualify by clearing a means test. Here is how the costs to file for bankruptcy vary in these chapters:

Chapter 7 Bankruptcy
Filing for this chapter of bankruptcy will sum up anywhere between $500 and $3000. The basis costs involved are,

  • Credit report fees
    To provide your complete financial information with its accurate history, you will need a detailed credit report. For those who haven’t generated a credit report in the last 12 months, major agencies will provide this service free of cost. But if you have previously generated a credit report, this can be an addition to your list of costs of filing for bankruptcy.
  • Court filing fee
    A fixed amount is paid for bankruptcy court filing fees and a small amount to the bankruptcy trustee. You can also apply to have this fee waived. Your financial situation and qualification will be taken into consideration for waiver approval. If you do not qualify for the waiver, the fees can be paid in installments.
  • Attorney fee
    The attorney hired, the time taken for filing and resolution procedure, and your case’s complexity will determine this fee. Such costs may also vary depending on whether you hire a local or federal attorney.

Most attorneys have payment programs in place that let you pay them and complete your dues in installments. However, you are not legally obliged to hire an attorney to file for bankruptcy. This decision might initially cost less, but the chances of approval are reduced.

Chapter 13 Bankruptcy
Chapter 13 Bankruptcy often tends to cost more compared to the one discussed above, and the process tends to take longer. To get an estimate on monthly expenses, quite a few online calculators can be of help. The expenses that come with this chapter are as follows:

  • Attorney fee
    Attorney fees contribute a lot to the higher expenses of Chapter 13 bankruptcy. This cost also varies on the basis of your case’s longevity. However, with the “no look” fee that some courts allow, the attorney is obligated to quote a reasonable rate.
  • Filing fee
    The filing fees for Chapter 13 bankruptcy are identical to those involved in Chapter 7, i.e., a fixed amount that you are liable to pay.
  • Trustee fee
    With Chapter 13 bankruptcy filing, you get assigned a bankruptcy trustee, whose fees will be added to your expenses. These expenses will vary on the basis of how long your case lasts and are included in the monthly payment plan for the bankruptcy filing process.

People filing for bankruptcy are, at times, required to take courses in credit counseling and debtor education courses. These courses will have to be completed along the way during the filing process. Other miscellaneous costs include paperwork, copies, and more such as small ones. Some charges are also variable depending on the state you are filing from.