Interviewer: I would imagine a common question is how much does it cost to file, and is it paid off all at once?
Chapter 7 Filing Requires Up Front Payment, Chapter 13 Is Structured on a Payment Plan
Court: For a Chapter 7, you have to pay all the fees up front. That’s one of the disadvantages of a Chapter 7. With a Chapter 13, the lawyer actually gets paid through the payment plan. When you pay the trustee, the lawyer is getting a portion of that for his fees.
A lot of times, if a Chapter 13 is right for you, we can set up a down payment and then the rest of my fees would come out in the monthly payments. If it’s Chapter 7, then you do have to pay everything right up front, because you’re going to be extinguishing all of your debts, so, as the bankruptcy attorney, I can’t really be a debtor.
I would be extinguishing your debt to me by filing your bankruptcy. That’s why we have everybody pay up front with the Chapter 7.
Interviewer: How much do the fees run, typically?
The Fees for Credit Counseling and Credit Reports Are Approximately $400.00
Court: There are some filing fees and some costs, and you have to attend a credit counseling class and you have to obtain the credit reports for either a Chapter 7 or a Chapter 13 filing. The fee part is going to be about $400.00.
The Total Cost Is Approximately $2,000 to $3,200.00
Then, depending on your case, my fee will range anywhere from $900.00 to $1,800. For a Chapter 13, you would pay a down payment of typically $500.00 to $750.00, and then the rest of it would be taken care of through the payments. The total would be about $3,200.
Interviewer: With the amount of relief people are getting, their fees are so low, it seems like it is absolutely worth it to file for bankruptcy.
Court: Yes. If you just look at the math – let’s say you have $50,000, $60,000 in debt and you can get rid of it for $2,000, that’s a pretty good deal.