How much does it cost to file bankruptcy?

Chapter 7

What a Chapter 7 costs, and why it's paid before filing.

The typical attorney fee for a Chapter 7 runs about $1,500 to $1,600, plus the $338 court filing fee. Both are paid before the case is filed.

Here is the part nobody explains. The moment you file a Chapter 7, everyone you owe money to becomes a creditor in your case. If you still owed us attorney fees, that would include us, and your lawyer cannot also be your creditor. So the law itself is why Chapter 7 fees are paid first. It isn't a firm policy, and no honest bankruptcy attorney can do it differently.

What we can do: you're welcome to make payments toward the fee before filing, at your own pace. We just can't file until it's paid. And if you make payments and then change your mind about filing, we return your money.

One thing we don't do is filing-fee waivers. Courts rarely grant them, and the cases where a waiver makes sense usually have a better answer sitting right next to them, which brings me to Chapter 13.

Chapter 13

Chapter 13: $313 down, and the fee rides in your plan.

In most Chapter 13 cases, the only money you pay up front is the $313 court filing fee. That surprises almost everyone, so let me say it plainly: you can usually hire us for $313 down.

The attorney fee, typically $4,500, is paid through the case itself. You make one monthly payment to the Chapter 13 trustee, and the trustee pays us out of it, the same way your creditors get paid. You don't write us a separate check.

And the fee isn't just whatever we feel like charging. It's a standard amount the court recognizes, and if a case ever needs work beyond the normal, we have to detail every hour and a judge must approve any additional fee. Your lawyer's bill is one of the few bills in your life that a federal judge reviews for you.

A few situations do require some attorney money up front, and I'll tell you at the consultation if yours is one: a rush filing to stop a foreclosure or repossession, a prior case that was dismissed for missed payments, tax returns that still need to be filed before the case can be confirmed, or a case where there's no paycheck for a salary deduction and we're relying on you to pay directly.

If you're being garnished

The garnishment math most people never hear.

If your paycheck is being garnished, two things matter.

First, we can ask the court to let you pay the $313 filing fee over sixty days. Filing is what stops the garnishment, so this gets the protection in place first and lets you pay the fee out of the paycheck you just got back. That option is for Chapter 13; there's no deferral for a Chapter 7.

Second, and this is the part I wish more people knew: money your employer withheld but hasn't yet sent to the creditor often goes to the trustee instead once you file. If it's more than your plan payment, we can file a motion to get the difference refunded to you.

Don't wait until the garnishment has bled you dry to ask about this. The earlier you come in, the more of your own money we can put back in your pocket.

The other costs

The two required courses, and what they cost.

Everyone who files takes a credit counseling course before filing. It runs about $25 online or $30 by phone, and it's often free if your income is social security. The second course comes after filing and costs around $20.

There are more than a thousand companies approved to provide these courses, and you're free to shop for a cheaper one. We use one particular company because we have an account set up: you give them our code, they email us your certificate directly, and it's one less piece of paper for you to keep track of. The office can give you the sheet with the details, and it's one of the things we cover at your first appointment.

Common questions

The rest of what people ask about money.

Is the fee the same if we file as a married couple? Yes, with our firm the fee is the same for a single or joint filing. Some firms charge more for couples. We don't.

What about business bankruptcies? We don't do business filings. Sometimes a person's business debts belong in their personal Chapter 7 and we can handle that, but a business that needs its own case usually needs a Chapter 11, and we refer those out to attorneys who do them. Fair warning: retainers in those cases can run into the tens of thousands.

Does the quoted fee cover everything? In almost every case, yes. The exception is a case that needs far more work than normal, and even then a judge has to approve any additional fee after we account for our time.

Why not just find the cheapest lawyer? Ask whoever quotes you the cheap number two questions: is the consultation with an attorney, and what happens to the price when your case stops being simple? Then look up what your lawyer has actually done when a case got hard.