How much does it cost to file for bankruptcy?

How Much Does It Cost to File Bankruptcy? What are Normal Fees for an Attorney?

Good question with no easy answer. Of course, everyone preparing to file bankruptcy wants to know the cost. After all, bankruptcy usually comes at a time when money is tight, so wanting to find the best rate is entirely understandable. Be warned, however, that the cheapest bankruptcy attorney is not necessarily the best bankruptcy attorney. The bankruptcy process is fraught with peril, you want to find Frodo and avoid Smeagol at all costs. Having said that, let’s delve into the numbers.

Average Cost of Chapter 7 Bankruptcy Attorney’s Fees

The main cost of filing for bankruptcy is the attorney’s fee. An average cost of filing chapter 7 bankruptcy is approximately $1,250 for a lawyer plus the standard filing fee of $306. The attorney’s fees for a bankruptcy vary by market, some large metro areas may average higher fees, some lower. For example, based on conversations I’ve had with attorney friends, the average chapter 7 fees in Detroit (about $900) are higher than in Charlotte, NC ($1,500). Some lawyers will charge based on the complexity of your case. If you have what is known as a “no asset” chapter 7 case, your fee may be lower than if there are complexities at play than can involve litigation.

Cost of Chapter 13 Bankruptcy

Chapter 13 bankruptcy fees are set by the local Bankruptcy Court, but a rough national average is about $3,000. Keep in mind, however, that many bankruptcy attorneys will file chapter 13 cases for less than the full amount of the fee because attorney’s fees are paid out as part of the chapter 13 repayment plan. In some cases, attorneys will file a chapter 13 case with no money down except the $281 filing fee.

In addition to attorney’s fees and filing fee, debtors are responsible for a credit counseling and personal financial management course, so tack on an additional $50-100 depending on location.

Attorneys Fees Are Public Record

That’s right, attorneys fees must be disclosed in a bankruptcy filing just like real estate and personal property. It is possible to research the fees that any bankruptcy law firm charges by visiting the federal PACER website and doing a party search. It will cost you 8 cents per page viewed, but you can search PACER by bankruptcy district, which will give you a cross section of the fees charged in your area, or search by specific firm to get an idea of what it will take to retain an attorney you’ve heard good things about. Local rules may require additional disclosure, but attorneys fees must be listed on the Statement of Financial Affairs #9 which asks for a list of:

all payments made or property transferred by or on behalf of the debtor to any persons, including attorneys, for consultation concerning debt consolidation, relief under the bankruptcy law or preparation of a petition in bankruptcy within one year immediately preceding the commencement of this case.

You Get What You Pay For

In virtually any city you visit you’re sure to see billboards advertising $500 chapter 7 filings. Is it wise to shop for the cheapest bankruptcy attorney? Probably not. As explained by Orlando bankruptcy attorney, Lori Patton:

Experts say that filing a bankruptcy is one of the top 5 most traumatic events that can happen in an American’s adult life, right up there with death of a loved one and divorce. It’s a big deal. The law that is in place is complex with requirements and timelines that can be unforgiving if missed. While we may make it look like it’s just filling out some forms and showing up a time or two to places, it’s much more complex. The experienced bankruptcy attorneys make it look easy because that’s our job and we do it well. You wouldn’t ask a family doctor to perform your heart surgery would you? Just like a doctor can’t (and shouldn’t) do all medicine, an attorney can’t (and shouldn’t) do all legal. There are many pitfalls out there in the bankruptcy process. An experienced, skilled bankruptcy attorney can guide you in the right direction and give you the individual attention you deserve. A cheaper fee might not mean as much attention or care at a time you need it most. If you are seriously considering bankruptcy, take the time to find an attorney experienced in bankruptcy. The experienced bankruptcy attorney’s fees may be a hundred or so higher than the other guys, but… you know it’s coming… You get what you pay for.

Especially during a period of financial hardship, filing for bankruptcy can seem quite expensive. However, spending a few hundred extra dollars is probably worth the peace of mind that comes with knowing you’re in good hands. Further, most bankruptcy attorneys understand the circumstances you find yourself in and offer manageable installment plans.

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