How Much Money do You Need to Start the Bankruptcy Process?

When you first discover you are bankrupt and in need of protecting your assets from bill collectors, money will usually be the top priority in your thinking order. You will soon discover there is not enough money to go around, and that is what is causing you all of the grief. So, it should not come as a shock to anyone that when you realize you must file for bankruptcy protection, you are going to be concerned with how much it will cost you to file.

This personal bankruptcy question was posted on the internet in 2011 in a bankruptcy discussion: “How much money do I need to have in order to start the bankruptcy process?”

The answer to this question depends on your financial circumstances, whether or not you plan to file Pro Se (without legal counsel), the type of bankruptcy you file, and the amount of assets you are trying to protect, if any.

There are basically two types of bankruptcies most individuals can file- a Chapter 7 or a Chapter 13. Each type of bankruptcy has an administrative court cost all filers must pay in order to start the bankruptcy process.

As of September 8, 2011, the federal bankruptcy court fees for filing an initial Chapter 7 bankruptcy, including any miscellaneous charges, is $299. The federal bankruptcy court fees for filing an initial Chapter 13 bankruptcy, including the $39 Miscellaneous Administrative Fee, is $274.

The fees for either bankruptcy can be paid in four payments over 120 days. If a joint petition is filed, only one filing fee and one administrative fee is charged. Depending on how the bankruptcy progresses, there can be other costs associated with the bankruptcy such as fees associated with various motions, notices, and office costs.

Legal fees, if you hire a bankruptcy lawyer to help you through the process, are determined by the complexity of the bankruptcy you file. Each bankruptcy lawyer has their own fee structure, so the initial start up costs can vary.

Most all Chapter 7 bankruptcy lawyers will ask you to pay their fees up front. They are acutely aware of how you got into a bankrupt situation, and they do not want to be a part of the discharge list of the bankruptcy. Most of the time, you will be able to save enough money in the look back period to make your initial payment for the basic services of a Chapter 7 bankruptcy lawyer.

For Chapter 13 cases, few lawyers will allow you to build your legal fees into a Chapter 13 plan. This is because over 60% of the Chapter 13 cases end up unsuccessful, and the lawyers lose money when they build their fees into the plan. Just like in a Chapter 7 bankruptcy, you can usually save enough money for the legal fees during the look back period before filing.

In either case, most bankruptcy lawyers will provide you with a free initial consultation to explore whether or not you should file for bankruptcy, whether or not the lawyer feels they can help you, and how much the bankruptcy is probably going to cost you.

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