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Bankruptcy may offer a fresh start if you’re in debt, but it isn’t free. While the total cost for Chapter 7 bankruptcy ranges from $1,500 to $3,000, the range for Chapter 13 bankruptcy is $3,000 to $4,000, according to the National Bankruptcy Forum.
Included in those estimates are attorney and court filing fees, which vary from state to state and lawyer to lawyer. You’ll also pay varying fees based on the type of bankruptcy you’re pursuing — Chapter 7 and Chapter 13 bankruptcy are tailored to different income levels, and so are the associated fees. Here’s a guide to help navigate what you’ll need to file for bankruptcy, how you can file and what to do if you can’t afford bankruptcy fees.
How much does it cost to file for bankruptcy?
Filing for bankruptcy costs the same across the country, although attorney fees vary from lawyer to lawyer. Court fees for Chapter 7 bankruptcy total $335, while it costs $310 to file for Chapter 13 bankruptcy.
Upfront Chapter 7 bankruptcy fees:
- Filing fee: $245
- Trustee fee: $15
- Administrative fee: $75
- Total: $335
Upfront Chapter 13 bankruptcy fees:
- Filing fee: $235
- Trustee fee: none
- Administrative fee: $75
- Total: $310
Other fees: attorneys and bankruptcy counseling
According to the National Bankruptcy Forum, attorney fees vary depending on the city and state where you live. You may pay $774 to $1,820 for a Chapter 7 bankruptcy attorney in Dallas, for example, while you may pay $1,500 to $2,000 for a similar attorney in Los Angeles. Nationwide, the average cost for a Chapter 7 bankruptcy attorney is $1,250.
You’ll pay higher attorney fees when filing for Chapter 13 bankruptcy, with a nationwide average of $3,000, according to the National Bankruptcy Forum. Again, these fees vary by state and metropolitan area — expect to pay around $3,500 for a basic case in more expensive areas, like San Francisco. Elsewhere the costs may be lower. For example, in Alabama the average attorney fees are around $2,750.
All attorney fees are public record. The federal government manages the PACER website, which can be searched to determine how much a bankruptcy law firm will charge. However, you must first register before being able to search.
Regardless of the type of bankruptcy, you’ll be required to complete two rounds of pre-bankruptcy counseling, which come with their own set of fees. You’re required to complete these courses within 180 days prior to filing for bankruptcy. According to the FTC, these courses cost about $50, but can vary depending on where you live. After you file for bankruptcy, you’ll also have to complete a debtor education course. The FTC says this typically costs between $50 and $100.
Do I need a lawyer to file bankruptcy?
You can file for bankruptcy on your own — it’s called pro se. However, it’s a dangerous game to play. Even the most standard bankruptcy case requires court filings, extensive documentation, interacting with creditors and navigating the legal system. If you’re not a lawyer, the best choice is usually to hire one. They’re the experts, and just because you file for bankruptcy doesn’t mean you’ll successfully obtain a bankruptcy ruling.
The rates of success for pro se filers will be different depending on where you live, but research has generally shown pro se bankruptcy filings to be less successful than those filed with an attorney. The American Bankruptcy Institute published data from fiscal years 2010 to 2016 showing that more than 50% of pro se Chapter 7 filers had their case dismissed within six months. Only 6% had their debts discharged. For Chapter 13 pro se filers, more than 47% had their case dismissed within six months, compared to about 14% for all Chapter 13 cases. Only 0.5% of pro se Chapter 13 cases were found to be discharged.
How to pay for bankruptcy
You can pay for bankruptcy out of pocket, but you can also explore different ways to raise money and save on bankruptcy costs.
- Obtain a court fee waiver for Chapter 7 proceedings (court fee waivers are usually not available for Chapter 13 proceedings).
- Pay court fees in installments. Usually you can separate payments in up to four installments.
- Use tax refunds to pay for attorney costs.
- Research whether you may be "judgment proof" or "collection proof," which will prevent creditors from suing you for disability income or Social Security income. For example, if you’re retired, disabled or elderly, you may not have to file for bankruptcy.
What do you need to file for bankruptcy?
Before you file, you’ll need to gather the following to bring to your attorney’s office. You’ll have to pay to access some of these documents, such as a credit report and paying for appraisals, which can vary.
- Credit report (attorney may charge $30 to $60 to obtain report)
- Pay stubs
- Copies of letters from collection agencies
- Real estate deeds
- Asset appraisals (home, jewelry, valuable items)
- Titles to cars, trailers, boats, trucks, etc.
- Life insurance policies
- Income tax returns from the previous two years (attorney may charge $10 to $20 to obtain IRS documents)
- List of creditors with the type of debt and the amount you owe
- Proof of income — amount, source and frequency
- List of all property
- Detailed report of living expenses, including housing, utilities, taxes, transportation, food, clothing and more
How can I file bankruptcy with no money?
If you have little to no money available to pay for bankruptcy proceedings, contact a pro bono lawyer. Look for pro bono attorneys in your area, or organizations that help individuals file for bankruptcy on a pro bono basis.
The American College of Bankruptcy Foundation has resources for those who need to file for bankruptcy with no means to pay for an attorney. Explore their website to find an attorney in your region who can help you through the process.
Filing for Chapter 7 vs. Chapter 13 bankruptcy costs
Chapter 13 bankruptcy is generally more expensive than Chapter 7. On average, the total cost of Chapter 7 including attorney fees could cost from $1,500 to $3000, while Chapter 13 fees will run you $3,000 to $4,000 with an attorney, according to the National Bankruptcy Forum.
Chapter 13 cases are considered more complex and have a lower success rate than Chapter 7 cases. Those who work with an attorney generally find greater success than those who file for bankruptcy on their own.
The bottom line: Should you file for bankruptcy?
Filing for bankruptcy is a serious step that will take time, cost a significant amount of money and impact your credit score for years to come. Most people should only file bankruptcy as a last result.
Bankruptcy may be right for you if you’re:
- Over your head in debt
- Dealing with multiple collections agencies
- Under threat of foreclosure on your home
- Being sued for payment by creditors
Filing for bankruptcy can stop creditors from hounding you to pay personal loan debts, medical bills, lawsuit debts and credit card debt.
While you can get a fresh start financially through bankruptcy, don’t forget that fresh start comes at a cost. Chapter 7 bankruptcy stays on your credit report for 10 years, while Chapter 13 will remain on your credit report for seven years. This may affect your ability to obtain future financing, from buying a home to obtaining a business loan. Additionally, despite your challenging financial situation, you’ll have to pay fees upfront for court filings, attorneys, counseling and more.
Bankruptcy is a serious choice, so make sure you give it serious thought before proceeding.