One of the most popular questions I answer about bankruptcy is how much will it cost to file?  With any legal service there is a cost and whenever you start a case with the court system, even the Bankruptcy Court, there is a cost.  Under very rare circumstances filing fees can be waived by the Court if you are filing without the assistance of an attorney.  Generally, however, anyone filing with a bankruptcy attorney will have costs associated with the filing.

There is one fixed cost that everyone filing for bankruptcy will have and that is the filing fee with the Court.  As of the date of this post those filing fees were $306.00 for a Chapter 7 case and $281.00 for a Chapter 13 case.  These filing fees change from time to time but the current amounts have been in place for about a year.

While not a fixed cost, another cost that everyone filing bankruptcy will have is the cost for the pre-filing credit counseling class and the post-filing debtor education class.  Prices for these classes vary depending on what provider you use, but our firm uses a service that charges $5.00 for the first class per person and $15.00 for the second class per person.  So a married couple filing a joint bankruptcy case can expect class expenses of at least $40.00 total.  The class provided must be approved by the United States Trustee's Office and that office keeps a list of currently approved credit and debtor education counseling providers.  For the current approved list please click here.

Another cost that may arise in your bankruptcy case if you are filing with an attorney is the cost of due diligence materials.  This cost is generally limited to the cost to the attorney of pulling your credit report.  In many cases, this cost is included in some other disclosed expense like the attorney fee.  This firm includes this cost in our filing and due diligence fee.  Our filing and due diligence fee includes the filing fee noted above and the cost of other services, like pulling a client's credit report.  The filing and due diligence fee for a Chapter 7 is $400.00 and for a Chapter 13 $365.00.  If a case is not filed for any reason this fee should be refunded and this firm does refund that fee if the case is not filed.

The final major component of any bankruptcy case filed with the assistance of a bankruptcy attorney is the attorney fee itself.  This fee varies and can be a wide range.  As a general rule you can expect to pay an attorney fee of anywhere from $900 - $2500 for a Chapter 7 and $3,000 - $4,500 for a Chapter 13.  In a Chapter 13 case, your attorney may elect to seek approved compensation from the bankruptcy court and as a consequence, you would be paying by the hour.  Fee arrangements in a Chapter 13 case in the District of Maryland are governed by the Court's Local Rules in Appendix F.  The reasonableness of any fee charged by an attorney is governed by the bankruptcy code.

Any fee charged by an attorney is going to be based on the amount of work the attorney anticipates your case will require.  Cases with fewer creditors and lower income will cost less than cases with more creditors, higher income, and other issues.  The income of the client has nothing to do with the cost.  The higher a person's gross household income is, the more likely the attorney will have to deal with Means Test issues in the case.  As a consequence, your attorney fee will be higher.  Some other issues that will require higher bankruptcy attorney fees include reaffirmation agreements, self-employment, preferential payments, asset transfers, asset protection issues, and exemption problems.

In some cases, generally in a Chapter 13 case, there will be additional costs not related to the items discussed above.  Depending on your case situation these costs will generally be related to valuing secured assets like your home or your car.  If you are seeking to strip off subordinate liens on your home you will most likely need to get a professional appraisal done on the house.  This will usually cost about $500.00 and is in addition to the costs and fees discussed above.  If you are attempting to cram-down your car loan you may have an expense for a vehicle appraisal, but this is rare.

Finally, most bankruptcy fee agreements do not cover any fees for adversary proceedings or contested matters.  These services are generally outside the normal bankruptcy procedure and are usually billed at an hourly rate.  While they are rare, both types of proceedings may cost you a significant amount of money and should only be undertaken with an experienced bankruptcy attorney.

The fees and costs discussed above are generally what an experienced bankruptcy attorney charges.  There are other service providers like document preparers that charge less but are unable to provide legal advice.  If you are going to file bankruptcy, your best option is to hire an experienced bankruptcy attorney.  Next week I will discuss the impact of bankruptcy on your credit report.