How Much Does Bankruptcy Cost?

by Karen Oakes, Esq.

September 22, 2010

how much does bankruptcy cost

I asked my receptionist tonight what was the Number 1 question asked by callers to my office.

Her response:  “How much will a bankruptcy cost me?”   And callers are usually not happy to hear the answer:   “it depends.”

There is only one fee that doesn’t change–the filing fee.   In a chapter 7 case, it is $299; in a chapter 13 case, it is $274; and in a chapter 11 case, it is  $1039.   Prior to filing bankruptcy, a debtor must obtain a special credit counseling certificate from a private company; those fees range from $15 to $70.

And then, there is the attorney fee.     Attorney fees can range from $750 in some parts of the country and could exceed $50,000 in a chapter 11 case. 

So, why is there such a difference in attorney fees?   One explanation is that the costs of running a law office may be low in some parts of the country and extremely high in other parts of the country.   Costs include utilities, insurances,  staff, computer programs, furniture and fixtures, office supplies, advertising, travel, marketing, office equipment, leases, postage and copying costs.    And then, there is the attorney salary that has to be paid.   Every client pays a share of those expenses when they pay their bankruptcy attorney fee.

Another explanation is the amount of time that each potential client’s case will take in a law office.    Each case is unique.   Some cases may seem very easy and the attorney might decide to quote a lower than usual fee.   Other cases could consume a larger than usual portion of the attorney’s time, especially if there are issues that are sure to be litigated in the bankruptcy court (allegations of fraud or misconduct by a debtor or motions expected to be filed in the case, such as motions for relief from the automatic stay).   One such case in the news right now is the Guidice  bankruptcy case.   Teresa Guidice appears on a television reality show, “The Real Housewives of New Jersey”.   The United States Trustee has filed a motion to dismiss the Guidice case due to allegations of misconduct by the debtors.   If the United States Trustee’s Office is going to appear in your case, that will mean that the attorney will be doing additional work and will quote a higher fee.

There is no easy answer unless the attorney knows exactly how much that case will cost the attorney and has analyzed the amount of money he/she needs to make each month to stay in business.   An attorney who sets a lower amount might well find himself in bankruptcy court as a debtor.   An attorney who sets too high an amount might well find himself in front of a judge having to explain the inappropriate bankruptcy fee charged to the client.    The cost of the attorney should not be the deal-breaker for which attorney to use in a bankruptcy Even if  you think you cannot afford an attorney and will try this on your own — DON”T.   It is like being your own dentist–painful to watch, painful to go through, and could cause you to never smile again due to the stress you have caused yourself.

Image credit: Best In Plastics/Flickr

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I'm a consumer protection lawyer in Oregon, working with people in Klamath; Lake; Jackson; Josephine; Curry; and Deschutes County. I speak regularly on bankruptcy and consumer protection issues nationwide.

Last modified: May 7, 2014