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How Much Does Bankruptcy Cost?

Bankruptcy Attorneys

Bankruptcy Attorneys - CostThe Cost of a Bankruptcy Attorney

In most cases, the first question a client asks is how much does bankruptcy cost.  The answer is that it depends on the type of firm or bankruptcy attorney you want and the services they offer.  There are many different types of bankruptcy attorneys and law firms, just like there are many different types of people.  Additionally, there are different types of bankruptcies available.  First we need to look at the client and the types of law firms, before we look at the cost of the bankruptcy and the styles of attorneys.

Some law firms rely on their speed.  Other bankruptcy provide personalized service. Then there are others that have more experience.  You also have low budget bankruptcy practices, paralegal services and so on.  The cost to file bankruptcy is determined by what the client values in the law firm.  For example, does the client value speed, talking directly to an attorney?   Or, is a client willing to pay less to interact with only paralegals and never see the attorney until the court hearing?

When trying to find a bankruptcy attorney, law firm or paralegal service, these are questions every prospective client should ask.   What do you want out of your bankruptcy attorney, law firm or paralegal?  It should be noted, you will be hard pressed to find everything for discounted prices.  Like any product, if you want something dependable, reliable with all the perks, than the cost will tend to drive up.   On the bright side, the costs do hit a ceiling and you may find a practice that offers everything at competitive costs.

As stated above, this does not mean that you cannot “find a deal.”  For example, Tran Bankruptcy Law are bankruptcy attorneys with years of experience and the know how to be efficient and provide personal attention without the high fees.  This is due to the fact that Tran Bankruptcy Law have found ways to run their firms efficiently, while saving costs.  For example, Tran Bankruptcy Law have gone paperless, and learned how to use technology effectively to speed up the process.

Again, these are questions you should be asking your attorney.  Questions like, “Can you tell me YOUR bankruptcy process when preparing my case? Will I be contacting an attorney with all of my questions?  Do you receive my emails personally?  Do you know how to use Adobe?  Is there anyone else that handles my case?  Do you work on weekends?  What is your case load and how large is your staff?  Can you show me your process?”

If you take your time finding a bankruptcy attorney, you will find one the right attorney that meets your needs.

The Cost of Bankruptcy

Next you have to look at the actual cost of filing bankruptcy.

The old saying goes, not all cases are the same.  Everyone’s financial situation is different.  I have filed over 700 bankruptcy cases, and no one has the exact same situation.  If you already talked to an attorney, you probably heard that the fees depend on the complexity of the case.  In other words, your personal situation will make a large impact on the cost to file bankruptcy.

The lowest fees are generally provided for people who are on a fixed income (such as social security income), have no real estate, no car payment, are single with no dependents and have little to no assets.  In many cases, the amount of creditors and debt also factors into the costs.  To be fair, it is more work if you have more creditors.  On the other side, bankruptcy firms will charge more for clients who are married with dependents, who own real estate or a business, and have transferred property or sold assets etc.

Ultimately if you are working, you will pay more than a person who is on social security, unemployment or disability. This is due to the fact that the attorney has to calculate your income.  This might sound simple, but if you have heard of the “means test,” or calculating “schedule I,” you will understand that it’s just…more work.

Chapter 7

There are different costs depending on the type of bankruptcy you file.  In a Chapter 7, costs are determined by the factors above.  Also keep in mind that there is a court filing fee.  Court filing fees also depend on the Chapter you are filing.  Additionally, there is a credit counseling and debtor education class that you have to take that costs money.   Below are other possible costs that you should discuss with your bankruptcy attorney:

  • Filing Fee
  • Credit Counseling Course
  • Debtor Education Course/Financial Management Course
  • Credit Report
  • Appraisals on your home and other real estate
  • Tax Transcripts
  • Copies / Mail
  • Court motions

Chapter 13

Like a Chapter 7, many of the costs above are incorporated into a Chapter 13.  However, a Chapter 13 requires more work from bankruptcy attorneys.  There are additional hearings and documentation that needs to be filed in a Chapter 13.  An attorney needs to prepare the Chapter 13 Plan which reorganizes your debt and calculates percentages that are paid to your creditors.

Although most Chapter 13 attorneys charge the same, keep in mind that you can negotiate the upfront fees of a Chapter 13.  The remainder of the fees will be taken out of your Chapter 13 plan payments.   Therefore, in a Chapter 13, it is really important to find an attorney that you are comfortable with.  They are your attorneys for the entire Chapter 13.

Remember that finding an attorney will take some patience and some time.  The good news is that most bankruptcy attorneys offer free consultations and evaluations.  Therefore, there should be no reason not to talk to a number of attorneys before making your decision.