Bankruptcy allows indebted consumers and businesses to make a fresh start. However, this start will come at a price.
At Simer & Tetens, we receive many calls from the public, and one common question is, “How much does it cost to file for bankruptcy?” Below we will run down the costs.
To submit your petition to the court, you need to pay a filing fee. Currently, the filing fee depends on which bankruptcy chapter you file:
- Chapter 7: $335.00
- Chapter 13: $310.00
You must pay these fees at the time of filing, so it is best to save up some money before you decide to file for bankruptcy. If you do not have the money, you can request permission to pay in installments.
Your lawyer will also charge fees to complete the paperwork and shepherd your case through the bankruptcy process.
Some people try to handle their own bankruptcy for this reason, not wanting to pay a lawyer anything. However, studies have shown that those who file on their own (called a “pro se” filer) are much less likely to get their bankruptcy approved by the court. For this reason, you really need an attorney.
The fees a lawyer will charge depend on several factors.
In a Chapter 7, the complexity of the case drives how much a lawyer will charge. Usually, lawyers charge a flat fee that can range anywhere from $1,000 to $5,000. You should meet with an attorney for a free consultation, during which he can assess your case and give you an estimate of how much he will charge. You will need to pay the lawyer ahead of time.
In a Chapter 13, the fee will also vary by the complexity of the case. Because Chapter 13 cases take 3-5 years to complete, you can spread out your attorneys’ fees over the course of the repayment period, which makes it much more affordable.
Under bankruptcy law, a lawyer’s fees must be reasonable, and lawyers who file a Chapter 13 case must disclose their fees to the court for approval.
To speed up the process, many district courts set guideline amounts that the court will consider presumptively reasonable. This means that if your lawyer charges a fee within the guideline amount, a judge will almost always approve it.
In Waco, Texas, our clients file in the Bankruptcy Court for the Western District of Texas. Each division has issued its own orders about what is a presumptively reasonable fee.
If the attorney charges more than the guideline amount, a judge will need to review it. Sometimes it is perfectly legitimate for an attorney to charge more than the guideline, especially if the bankruptcy is particularly complicated or if the attorney has to fight off many creditor claims.
Buried Under Debt? Contact Us Today
Bankruptcy can be a good choice, depending on your circumstances. For more help thinking through your options, please contact Simer & Tetens today. One of our Waco bankruptcy attorneys will be happy to meet with you to review your case.