How much does it cost to file bankruptcy?
When you’re dealing with debt, you may feel that you’re in tough and lonely place. Debt takes a heavy toll on people – on their mental health, their physical health, their emotional and spiritual health. Fortunately, bankruptcy is an option for many people. So if that’s you, one of the first questions you may have is how much does it cost to file bankruptcy?
Before we dive into costs, I want to share some numbers. So far, for the year 2018, 1,860 chapter 7 bankruptcy cases have been filed by people and/or businesses that live in Brooklyn and Queens. In the month of May 2018, there were 399 chapter 7 bankruptcy filings. More people file for bankruptcy than you think.
When I meet with potential clients, I get many of the same questions. One of the most popular questions – and important ones – is how much does it cost to file for bankruptcy? There are several different parts to the cost, which we’ll explain below.
Bankruptcy Case Filing Fee
One part of the cost to file for bankruptcy is the court filing fee. For a chapter 7 case, the filing fee is currently $335.00, while for a chapter 13 case, the filing fee is $310.00. Generally, the filing fee is due at the time the case will be filed. To help make it a little easier for some debtors, you can make an application to pay the filing fee in installments over four months. The caveat is that at least $70 has to be paid when the case is filed. When I work with debtors that want to file the application for installments, I request $85 up front for the first installment, and then they will pay three more installments over the next three months of $85, $85, and $80. Keep in mind, though, that if you fail to pay the filing fee installments as ordered by the court, your case may be dismissed!
Credit Counseling and Debtor Education Courses for Bankruptcy
If you’ve been exploring bankruptcy, you probably know by now that you have to take the “first course” before your case is filed, and the “second course” after your case is filed. The first course is known as the credit counseling course, while the second course is the debtor education course. There are plenty of agencies that offer the courses, but you have to be sure that the agency is approved to issue the certificate in the district where your case will be filed. (If you’re not sure, the USDOJ maintains a searchable list to confirm that the agency you want to use is approved to issue the certificate in your district.)
You can take these courses different ways, usually either over the internet, over the phone, and in person. Over the internet is generally the cheapest way to complete the courses, while in-person, if you can find it, is the most expensive. The prices are all over the board, but for the internet courses, they are usually around $10 to $20 for each course.
Bankruptcy Attorneys Fees
The final part of the cost to file for bankruptcy are the attorney fees. There’s no way to provide an expected range for this, as fees vary by jurisdiction, challenges presented in the case, etc. Some attorneys create their fee on a sliding scale based on how much you owe or how many creditors you have. Others charge a flat fee, irrespective of the amount of debt or number of creditors. (At the Law Office of Richard Kistnen, I’ve created my fee to be flat, not based on the size of the debt or number of creditors.)
Just know that in taking on a bankruptcy case, there’s time involved in meeting with debtors, pulling credit reports, organizing the liabilities, preparing and filing the schedules, appearing in court, etc. (Even in my own practice, the simplest of cases probably takes about five hours of time.) Additionally, in chapter 7 cases, attorneys fees are to be paid prior to the case filing (otherwise the attorney is a creditor of the debtor, and that can create an ethical issue.) In inquiring about legal fees, you may want to ask what the law firm charges per hour to get a sense of how much it would cost.
Conclusion
It can be frustrating and challenging to have to come up with money to file for bankruptcy. If you have been thinking about filing for bankruptcy, think about the fees in three parts. First, there is a case filing fee. Fortunately, you can apply to pay the filing fee in installments, but just know that you have to pay a first installment when your case is filed. The second part to the cost of filing for bankruptcy are the costs associated with credit counseling and debtor education courses. You can complete these courses over the internet, over the phone or in person, with the internet option being the cheapest and the in-person option being the most expensive. Finally, there are the attorneys fees, which simply vary from attorney to attorney.
If you’re interested in filing for bankruptcy on your own, and want some guidance, then you may want to check out the Chapter 7 Bankruptcy Webinar that I will be hosting!
Law Office of Richard Kistnen
128-22 Rockaway Boulevard
South Ozone Park, NY 11420
Tel.: (718) 738-2324