Costs for filing bankruptcy can be high
One of the most common questions we get on your bankruptcy forum is, “Why does it cost so much to file bankruptcy?” If you are facing a financial crisis and considering filing bankruptcy chances are you don’t have hundreds of dollars to pay hire a lawyer. So what are your options?
Some debtors ask if there is a lawyer willing to take their case for free. How many people like to work for free? Would you be willing to do a lot of work for free? I didn’t think so. Lawyers feel the same. Their time is money, and although some bankruptcy lawyers may take a few pro bono cases or you may find legal services for low income debtors, the truth is this is not a valid option for most bankruptcy filers.
So what are your options?
1. You can file without a lawyer
This is called a pro se filing. This is a legal process and can be done by anyone considering filing bankruptcy. What are the downsides? The courts will not give you a “pass” just because you are not a legal expert. They will expect you to understand the legal process and file all the bankruptcy forms accurately and on time.
2. You can hire a bankruptcy lawyer
This option is quite a bit more expensive, especially for a complicated Chapter 13 bankruptcy case. The good news is that your bankruptcy attorney may allow you to incorporate their fees into the 3 or 5 year bankruptcy plan and make monthly payments to pay their fees.
Fees if you do not hire a Bankruptcy Lawyer
Unfortunately, even if you do not hire a bankruptcy lawyer the basic fees are expensive. Consider, effective November 1, 2011, the total fees collected by the bankruptcy courts at the time of filing are as follows:
- Chapter 7 $306
- Chapter 9 $1,046
- Chapter 11 $1,046
- Chapter 12 $246
- Chapter 13 $281
- Chapter 15 $1,046
Add to the filing fees the cost to take a credit counseling course ($15-$70) and a financial management course ($15-$70) and for even the most bankruptcy you could end up paying close to $400. Now, if you have very limited income (150% below the poverty level) it may be possible to have your filing fee waived but you will have to petition the court.
Other bankruptcy fees that are now charged by the bankruptcy court includes a $30 increase for a bankruptcy filer to amend their disclosures in their Schedule D, E, F, G or H in the debtor’s Schedules of Assets and Liabilities.
The courts have also increased fees to do a record search, file an adversary proceeding, retrieve records, to file a notice of appeal, for returned checks, for exemplications, for a motion to lift a stay and Title 11 Administrative fees. You can also be charged if you request to convert your Chapter 13 Bankruptcy to a Chapter 7 Bankruptcy.
Add these fees on top of a bankruptcy lawyer fee which could be $750 or more for Chapter 7 and $2,500 to $4,000 for more complicated Chapter 13 bankruptcy cases and you can begin to see why bankruptcy costs so much money.