Thinking about filing for bankruptcy? There are
significant upfront costs. The purpose of this
article is to give you a general idea of what to
expect.
Your minimum cost will be around $350 if you
prepare your own forms that you download
for free from the courts. These forms are
complicated and will take a long time to
complete.
COST #1 - CREDIT COUNSELING CERTIFICATE & BUDGET
Budget: $50-$60
One of the first things that you will need to do is
to contact a court-approved credit counselor.
Counseling sessions take anywhere from 45 minutes to
2 hours. Following this counseling, you will receive
a certificate and budget which must be filed with the
court along with your bankruptcy paperwork.
This has to be done within six months before filing
your bankruptcy petition. Many of counseling
services offer on-line or telephone counseling.
If you have a lawyer, sometimes the fee is
part of the cost charged by your attorney.
In some cases, this fee can be waived
waived or reduced.
COST #2 - PREPARING YOUR BANKRUPTCY PETITION
Budget: $0 - $800 +
A. Bankruptcy Lawyers
With the complexities of the new bankruptcy
laws, you are wise to hire an attorney. The
problem is that the reform bill has made
bankruptcy so complicated that attorneys have
had to raise their rates. On the low end,
I have found some attorneys who charge approximately
$800. More likely, you are looking at $1,500
to $2,500 in attorney fees.
Some attorneys will let you pay their fees in
installments. If the installments are through
a financing house, find out what the interest
rate is!
There may be pro bono (free) services
available. Check with your State Bar
Association to see if there are any attorneys
who will handle bankruptcy petitions on a
pro bono basis.
B. Document Preparers or Paralegals
If you cannot afford an attorney but are nervous
about preparing your own form, a document preparer
or paralegal can help. Plan on around $200-$400 for
these services. Document preparers cannot
give you legal advice or represent you in court.
C. Debt Relief Agency
Attorneys, document preparers, or anyone else
engaged in the business of preparing and/or
filing bankruptcy forms are considered to be
"debt relief agencies," as defined in the Code.
A debt relief agency is required to tell you
upfront what work will be performed and what
exactly it will cost.
D. Bankruptcy Forms and Software
"Fillable" forms range from $0.00 (provided by the
bankruptcy courts with minimal instructions) to
approximately $700.00. You really should
hire an attorney, but if you cannot afford one,
many of the forms offer step-by-step guidance,
sort of like income tax software that you may
have used. You can find some good software
packages for under $50.
E. Court Filing Fees
Plan on at least a $250-$300 court filing fee.
Check with your local bankruptcy court to get the
exact figure.
COST #3 - MORE TO THE CREDIT COUNSELOR
When it's all said and done, you need to get a
"pre-discharge bankruptcy education certificate."
The average cost is $50.
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This article is not intended to be legal advice, but
simply guide to help you budget and plan for a
bankruptcy filing. You can find links to the courts,
court-approved credit counselors, attorney searches
and affordable software packages at:
http://www.bankruptcy-filing.com.
