How much does it cost to file Chapter 13 bankruptcy?
Filing Chapter 13 bankruptcy can be expensive. Not only will you need to pay filing fees, expenses for credit and financial counseling, you may also decide to hire a bankruptcy lawyer, which can costs hundreds or thousands of dollars.
Filing fees for bankruptcy
The first costs for filing bankruptcy will be the fee to file the bankruptcy petition. Currently the filing fee to file a Chapter 13 bankruptcy petition is $281, although this amount is subject to change. For more information about the costs to file visit the website of the U.S. Courts at www.uscourts.gov. Look under "Bankruptcy" and then click on "Bankruptcy Resources."
Keep in mind, if you are unable to pay the fee you have two options. First, you can complete the Application to Pay Filing Fee In Installments (Official Form B3A). The first installment should accompany your petition.
Next, if you are filing a Chapter 7 bankruptcy, you can ask for a waiver by submitting an Application for Waiver of the Chapter 7 Filing Fee (Official Form B3B). More information about the poverty guidelines to qualify for a waiver can be found at the US Courts website.
Other bankruptcy costs
Debtors who file Chapter 13 bankruptcy must also complete a creditor counseling course six months before they file bankruptcy and complete a personal financial management course prior to the bankruptcy discharge.
Fees for counseling and financial management courses can range from $20 and $50. If you are unable to pay for the services you may be given a waiver or you can negotiate a lower payment.
Costs to hire a bankruptcy lawyer
While bankruptcy costs to hire a bankruptcy lawyer may vary by state and by lawyer, under bankruptcy laws the costs must first be disclosed and they must be considered reasonable by the bankruptcy courts. If a lawyer charges a fee which is not considered reasonable, the court can force the lawyer to refund all or a portion of the costs back to the debtor.
So how do you know if you have paid too much for a bankruptcy lawyer? Bankruptcy lawyers do not want to have their fees reviewed and courts do not want to have to spend their time reviewing lawyer’s fees. The good news is most lawyers will follow the fee guidelines which set a "presumptively reasonable" or "no-look" fee amount for Chapter 13 bankruptcy.
What if the lawyer charges more than the guidelines suggest? Although this is allowed, there are specific procedures for each court which allow the court to review the fees a lawyer charged and determine whether the higher fee is justified in a particular case.
How much are the bankruptcy lawyer fees?
Fees charged by bankruptcy lawyers can vary substantially by state. For instance, a bankruptcy lawyer in North Dakota may charge as little as $1,500, but the average in some states could be as high as $4,000. Currently, fees range from $2,500 to $6,000.
The good news is most Chapter 13 debtors can pay their fees through the Chapter 13 repayment plan after the case is filed. Whether you can pay part of the fee or all of the fee depends on the rules of your bankruptcy court.
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If you have filed bankruptcy there are lenders willing to give loans, although interest rates may be higher.