HOW MUCH DOES IT COST TO FILE BANKRUPTCY?
Bankruptcy law practice is a very specialized niche in the law. To the average person, it may appear a simple area of the law. However, it is anything but simple. But one of the first questions anyone has is how much does it cost to file bankruptcy?
Sure some bankruptcy cases are simpler than others, but it is a mistake to assume that bankruptcy is law is relatively straightforward.
Many people who are considering filing for bankruptcy are often concerned about the cost, for obvious reasons. The most obvious reason is that they are already in a difficult financial situation; otherwise, they would not be filing for bankruptcy or even contemplating it; therefore, finding out the normal range of fees in answering the question how much does it cost to file bankruptcy and the factors that determine this are very important to know.
HOW MUCH DOES IT COST TO FILE BANKRUPTCY - THE MOST IMPORTANT FACTORS
WHAT CHAPTER THE BANKRUPTCY CASE IS FILED UNDER
A Chico Bankruptcy Attorney we spoke with stated the biggest factor in answering the question how much does it cost to file bankruptcy" is the chapter of bankruptcy the case is filed under.
"Most consumer cases are filed under either Chapter 7 or Chapter 13. Some Chapter 7 cases are very simple and very short if there are no complicating factors; however, a Chapter 13 case can go on for up to five years and usually involves numerous court hearings, objections and case monitoring after confirmation of the Chapter 13 plan...therefore, Chapter 13 cases are more expensive to file."
BUSINESS CASE OR CONSUMER CASE
Another California bankruptcy lawyer we spoke with, this time a Sacramento Bankruptcy Attorney, explained why even some Chapter 7 bankruptcy cases can be more expensive than others.
"From a cost viewpoint, there is a big difference between a "no-asset" simple Chapter 7 and the Chapter 7 bankruptcy case of someone who owns multiple parcels of real estate or relates to a failed business. Personal guarantees on business lines of credit, relief from stay motions and ongoing foreclosure cases can drive up the cost to file bankruptcy."
GOALS OF A CASE UNDER CHAPTER 13
A Terre Haute Bankruptcy Attorney from Indiana that we spoke to commented on how not all Chapter 13 bankruptcy cases are created equal:
"There is a huge difference how much it costs to file bankruptcy under Chapter 13 where the debtor/client seeks to achieve big commercial related results. For example, the complications and extra attorney time needed to cramdown five pieces of real estate and modify the mortgages on each one is vastly different from a Chapter case where the debtor/client is simply over median income (doesn't pass the means test) and has to simply pay a percentage of debts of the life of the Chapter 13 Plan."
GEOGRAPHIC LOCATION OF THE CASE
Every geographic location in the United States has different levels of living expense, from utility costs, housing, food and yes, even legal services. A Bankruptcy Attorney Tulsa may charge considerably less than a Bankruptcy Attorney Phoenix or a Bankruptcy Attorney Colorado Springs. Larger metropolitan areas have greater competition among the number of bankruptcy lawyers while smaller populated areas have fewer qualified bankruptcy lawyers.
AVERAGE COST OF A CHAPTER 7 BANKRUPTCY CASE
So the best way to to answer the question, how much does it cost to file bankruptcy, should be thought of on sliding scale, based on complexity, chapter, business or consumer case and what part of the country the case is filed.
For a Chapter 7, we agree with a Missouri Bankruptcy Attorney Springfield MO that a simple consumer case starts at around $1,000 and can go up to $3,500 for a business related case. These flat usually do not include litigation, if needed, make sure you read the attorney fee agreement and know the hourly rate of the bankruptcy attorney for such additional services.
AVERAGE COST OF A CHAPTER 13 BANKRUPTCY CASE
Most jurisdictions have what is called a "no look" fee for Chapter 13, which is a flat fee not questioned by the Bankruptcy Court and considered reasonable. This usually ranges from $2,500 to $3,500. Sometimes this includes everything. Sometimes, it is a base fee, with extra fees for mortgage modifications and case monitoring allowed and built into the plan, as long as they are disclosed.
BANKRUPTCY ATTORNEY EXPERIENCE - THE DETERMINING FACTOR
The experience level of bankruptcy lawyers will differ. That old saying "you get what you pay for" is true in most things in life and in answering how much does it cost to file bankruptcy, it is true. However, keep in mind that other than differences in the hourly rate of a bankruptcy attorney, most Bankruptcy Courts require the same flat fee and no look fees to apply to every bankruptcy attorney who represents debtor/clients before the Court.
Therefore, most people are surprised that they can hire one of the most experienced bankruptcy lawyers for the same cost as a rookie bankruptcy attorney. Choose wisely, do your homework and ask questions about experienced, no look fees, what's included in the flat fee and hourly rate and when it comes into play.