Let’s be perfectly honest: If bankruptcy is among your considerations for fixing your financial situation, the associated costs of filing likely aren’t significant enough to keep you from doing so.
Still, it’s good to understand what costs are involved so there aren’t any surprises. This article will walk you through the average costs for Chapter 7 and Chapter 13 bankruptcy, the most common types of consumer bankruptcy (Chapter 11 is far more expensive and usually reserved for extremely complicated cases involving very large amounts of debt).
Keep in mind these costs are just estimates based on national averages. Fees and other costs will vary by city and state and attorney fees will vary by attorney and the complexity of your case.
Filing fees
Whether you use an attorney or not, there is a fee to file both Chapter 7 and
Chapter 13 bankruptcy. These fees cover court costs for your case. For Chapter 7, the costs for filing, including administrative fees and trustee fees, usually runs around $350 or less. The filing fees for Chapter 13 are slightly more at roughly $385.
Attorney fees
As we said before, attorney fees will vary, but the average attorney fee for Chapter 7 runs around $1,100. Depending on where you live and the experience level of the attorney you choose, that cost can range from a low of around $800 to a high of roughly $1,500. That’s why it’s important to speak with a few attorneys before choosing one. You’ll want to save money if you can, but it’s also important to feel comfortable with the person you choose and feel confident in their expertise.
Keep in mind if your case requires more court time than average, your attorney fees could be more.
Chapter 13 is more expensive on average than Chapter 7, though, again, the
particulars of your case can impact your overall costs. Generally speaking, attorney fees for Chapter 13 typically run between $3,000 and $4,000.
Credit counseling/financial management courses
During the bankruptcy process, you’ll be required to take a credit counseling course before your case is approved by the court. The cost is usually nominal and depends on the area in which you live. Typically, these
courses run somewhere between $20 and $100.
Likewise, before your case is discharged, you’ll be required to take a financial management course to ensure you understand how to better manage your money going forward. These courses also run between $20 and $100 depending on where you live.
These courses are often referred to as bankruptcy certificates.
Conversion fees
Should your financial situation change during your bankruptcy process, it may be necessary to convert your Chapter 13 to Chapter 7 or vice versa. In this case, there can be an additional cost associated with the conversion. It is typically free to convert from Chapter 7 to Chapter 13, but there is a nominal fee of around $25 to convert from Chapter 13 to Chapter 7. (Learn more about the differences between the types of bankruptcy.)
Overall bankruptcy costs
Here’s a breakdown of the average overall costs you can expect when filing for bankruptcy:
Chapter 7
- Attorney fees: $800-$1,500
- Filing fees: $350
- Credit counseling/financial management courses: $20-$100
Chapter 13
- Attorney fees: $3,000-$4,000
- Filing fees: $385
- Credit counseling/financial management courses: $20-$100
Total average costs: $1,170-$1,950 (Chapter 7); $3,405-$4,485 (Chapter 13)
This article originally appeared on Resolve and was syndicated by MediaFeed.org.
Featured Image Credit: iStock.
