One of the more confusing topics our bankruptcy clients run into is differentiating the difference between attorney fees versus case costs. When a person files bankruptcy, he or she will incur two categories of expenses: attorney fees and case costs. The sum of the two expenses will be the total price of filing a bankruptcy.
Attorney fees are fees paid to the attorney for preparing, analyzing, filing, and representing a person in his or her bankruptcy case. In short, it is compensation to the attorney for his or her labor in handling a bankruptcy case. The attorney then takes those fees and pays for the expenses of his office, including office supplies, rent, staff wages, or withdraws it as his or her own income.
In a bankruptcy case, case costs generally only include court filing fees, debtor education courses, and the costs of pulling a credit report. These costs are charged by third parties, not by the attorney’s office. Court filing fees are the costs charged by the court to file a bankruptcy case. As of the time of the writing of this blog, a Chapter 7 bankruptcy costs $335 to file and a Chapter 13 bankruptcy costs $310. Debtor education course costs refer to the enrollment costs for the two mandatory approved courses a person has to take when filing bankruptcy. Finally, there might be costs associated with obtaining a credit report. Usually, we can help our clients pull a free report depending on their situation.
Hopefully, this sheds some light into the expenses a person incurs when filing for bankruptcy.