Everything You Need To Know About Bankruptcy Filing Costs
Is Bankruptcy an Investment?
Bankruptcy is not an expense, but rather an investment that can increase your net worth. Your net worth is the value of your property minus the amount of your debts. If you have positive net worth, that is great as it means that you have money that you can use for retirement, buying a home or other important milestones.
A lot of things that you purchase are expenses because you do not pay for them with the intention of improving your net worth. For example if you buy a flat screen television, while your quality of life may improve as you get to watch your favorite should in HD quality, it will not assist you to achieve your financial goals.
On the other hand, if you were to wipe out all your debts in bankruptcy, you instantly improve your net worth. Upon receiving a bankruptcy discharge you can stop worrying about your creditors and you can start planning your future. This is the reason people say that bankruptcy gives you are fresh start on life.
Should I hire a law firm based on price alone?
It is not advisable to hire a firm of attorneys to attend to your case just because their fees are lower than that of other attorneys. You should select an attorney who specializes in bankruptcy, with the adequate amount of experience to handle your case, who has time to expend on your case and whom you are able to work with.
What are bankruptcy petition preparers?
Do not hire cheap bankruptcy petition preparers to help you file your case. These are the companies that advertise on Craigslist and on the roadside poles with ridiculously cheap bankruptcy filing costs like $99 bankruptcy.
These so called petition preparers are not lawyers and they are not permitted to give you legal advice. If you count on them to handle your case, you might just be digging your own grave. Many of these companies have gotten into legal trouble for illegally giving bad legal advice to customers. They are not permitted to sell you court forms that are available online and type whatever you tell them to type.
How much does filing bankruptcy cost?
Your bankruptcy filing costs may be divided into four categories:
Chapter 13 Trustee Fees,
Bankruptcy Attorney Fees
While some attorneys charge a fixed rate to file a Chapter 7 bankruptcy, which fee will include all the time spent on the matter, other attorneys charge on an hourly basis.
With Chapter 7, attorneys will require this fee to be paid upfront before the attorney can file your case.
With respect to Chapter 13 bankruptcy, most district courts have a guideline amount which is area specific, and attorneys may not charge more than the guideline amount. Further, with chapter 13, attorneys fees are subject to review by a court. Although attorneys are not allowed to charge more than the guideline amount, in some cases if the circumstances of the case warrant and if the attorney can justify this to the court, the court may allow the attorney to charge such higher amount.
Bankruptcy Court Costs
Apart from the attorneys fee, you will have to pay court costs. Which costs are $335 for chapter 7 and $310 for Chapter 13.
Chapter 13 Bankruptcy Trustee Fees
In terms of Chapter 13, a trustee will make monthly payments to your creditors based on your repayment plan. For these services, the trustee will charge 10% of your monthly payment amounts. This fee will vary depending on the amount of your monthly plan payments.
Other Bankruptcy Filing Costs
A credit counseling course is required before filing your case, and a debtor education course is required after filing your case. The courses vary in price, depending on which course provider you choose, but they generally cost about $20 for both courses if your take them online.
Since all your debts have to be listed properly in bankruptcy, a merged credit-report with bankruptcy specific creditor addresses will be obtained. The credit report costs $33 for an individual and $53 for a married couple filing a joint bankruptcy case.
Also see on bankruptcy filing costs:
How Much Does It Cost To File Bankruptcy?
How Much Does a Chapter 7 Bankruptcy Cost?