The costs of a bankruptcy case can vary from case to case, although there are some set costs. The primary costs are the attorney’s fee, the filing fee, and the cost of a credit report. Here we will go over reach of these fees, the costs of each, and when they can vary.
- Pay Your Case over Time.
One of the most common questions I get asked is “How am I supposed to afford bankruptcy, if I am going bankrupt?!” This is an issue that our office has taken steps to remedy, and we can advise you on how to do so. First, we accept monthly payments towards your bankruptcy case. While we cannot file the bankruptcy case until we have been paid in full, we can start the process with a deposit and take payments until you’re actually ready to file. Second, the filing fee can be paid after you’ve filed your bankruptcy case over a period of a few months. Finally, if you are currently paying on credit cards or medical bills that you are trying to have resolved in bankruptcy, you can stop paying those to free up some monthly income to afford your bankruptcy case.
- The Cost of Attorney’s Fees
The cost of bankruptcy attorney’s fees depend on several factors. While many areas of law use an hourly arrangement, where the attorney bills at a specific hourly rate, most attorney’s bill a flat fee for a Chapter 7 Bankruptcy case. This means in a Chapter 7 Bankruptcy you should expect your attorney to bill one flat fee, and you would receive representation from pre-filing, filing, your 341 meeting, and all the way through the discharge and closing of your case. Most attorneys will also require these funds upfront because collecting attorney’s fees after filing your bankruptcy case is arguably a violation of the bankruptcy code’s prohibition on collecting on a pre-petition debt.
That being said, the amount of the flat fee varies depending on the complexity of your situation. For example, a person with $10,000 of credit card debt and only social security as income is going to be less complicated, and thus less costly, than a person with multiple businesses to shut down and debts in the six figures. Meeting with an experienced bankruptcy attorney to explain your situation will result in getting a Chapter 7 quote.
A Chapter 13 bankruptcy can be done on an hourly fee agreement or a flat fee agreement. In either case, the attorney will take a portion of their attorney’s fees up front. The remaining amount that is owed to them would be paid through the monthly plan payments you would otherwise already be making in a Chapter 13 bankruptcy. The hourly arrangement requires the attorney to file documentation of the time they’ve spent on your case with the Court, and get approval of those fees prior to being paid. The flat fee arrangement for attorney’s fees in a Chapter 13 is capped by the local bankruptcy rules.
- The Court Filing Fee
The second cost in a bankruptcy case is the court filing fee. As of October 2021, the Chapter 7 filing fee is $338, and the Chapter 13 filing fee is $313. You can pay these filing fees prior to the case being filed, or you can pay them after they’ve been filed in installment payments. These installment payments are made over a period of three to four months, thus making the affordability of a Chapter 7 much more in the grasp of a person that needs bankruptcy as a remedy. Some debtors are eligible for a filing fee waiver, however, those are difficult to qualify for. They require that you are an individual (not a business) filing a Chapter 7, and that you fall below 150% of the federal poverty guidelines. Additionally, the amount of assets a debtor has will be considered by the Judge when deciding whether to grant such a waiver.
- The Credit Report
The third cost in a bankruptcy case is the credit report. Our office requires a credit report be pulled in every bankruptcy case we file. As of October 2021, the software we use charges the cost of a single credit report at $35 and a joint credit report at $55. We pull credit reports to avoid missing any debts, and thus avoid any non-dischargeability issues with creditors not having received notice of the bankruptcy case.
Beyond that, additional attorney’s fees for the bankruptcy are very rare. If a creditor objects to your discharge and begins an “adversary proceeding,” (similar to a trial), an attorney typically would require a new and separate attorney’s fee arrangement to represent the debtor in that matter. Additionally, motions to redeem, and complex reaffirmation agreement negotiations can also cost more than the flat fee.
At Kootenai Bankruptcy, our experienced attorney can walk you through your debts and assess the total costs of your case. We take a strong stance on transparency, and inform our clients of every potential cost along the way. It’s important to review your unique circumstance with an experienced bankruptcy attorney if you’re considering filing a bankruptcy case. Call or text us today at (208) 719-0232 to meet our attorney about your bankruptcy case.