What does it cost to file Chapter 7 bankruptcy?

I guess it’s no surprise that our chapter 7 bankruptcy clients are often cash-strapped. So one of the first things a potential client wants to know during a consultation is how much bankruptcy costs. Obviously, every case is different, but here’s a rough version of what we tell clients about how much bankruptcy costs.

1. We charge a flat fee. If you’re considering Chapter 7 bankruptcy, you don’t want to worry about your lawyer running up the fee as he churns hours on your case. Flat fee billing gives our clients predictability–we quote you a fee before you sign up with us, and that’s what you’ll pay.

2. The amount of the fee depends. For a basic Chapter 7 for a single filer, we charge $1,800. For a joint filing, it’s $2,600 (there, I said it).

But not every case turns out to be basic, so it doesn’t mean that’s exactly what we’ll charge in your case. Your fee will be based on our best prediction of the complexity of your Chapter 7 case. One example: if a client is above median income, involving a much more detailed analysis under the means test, that case may cost more. There are other factors that may affect the complexity of your case, so here’s my advice on price-shopping–if a bankruptcy attorney can quote you a one-size-fits-all price before understanding your particular issues, run away. That lawyer probably doesn’t understand just how complex some cases can be.

3. There are fees in bankruptcy that don’t go to us. In a Chapter 7 case, there is a court filing fee of $335 and mandatory credit counseling fees (for our clients, credit counseling runs around $35 for a single filer or $50 for joint filers). You pay those fees to us and we forward them as needed.

4. Your Chapter 7 bankruptcy fee must be paid before we file your case. If we file your bankruptcy case and you haven’t paid our entire fee, the debt to us is discharged along with all your other debts. We’re out of luck. You might not want to hire the lawyer who doesn’t understand this concept and offers to let you pay after the bankruptcy is filed.

Last tip–you may not want to bargain-hunt on bankruptcy. The best lawyers will quote you a fair price, but the worst ones will probably discount their fees to try to take business from the good ones. You want a lawyer who’s experienced enough to understand a lot of the tricks and traps of bankruptcy. You also want someone who’ll be available to answer your questions, and won’t blow you off because they’re too busy with all their other cases. And you want someone who’s willing to use the bankruptcy law creatively to help you improve your situation. As it happens, we know a couple of guys who fit the bill pretty well.

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