Fees And Costs?

What Does It Cost To File Bankruptcy?

This is, understandably, one of the most often asked questions that I am asked. The answer depends upon how complicated your s situation is, whether litigation with creditors or the trustee is anticipated, the number and classification of creditors, and several other factors. Giving out fee quotations before having a full understanding of a prospective client's situation is difficult, and yet I am asked this question point blank without having any other information. Also, like under any personal service situation, everything is subject to negotiation, and I endeavor to work with all my clients so that they are comfortable with the payment amounts and how the representation is structured.

Having said this, the following guidelines may be helpful.

Chapter 7 Cases. In a Chapter 7 case the fee for a client with primarily consumer debts and with no anticipated litigation can be expected to be approximately $1,200 to $1,800. (This can be less in simple matters or more in complicated cases). In addition to the fee, the court charges a filing fee of $299 for Chapter 7 cases. This does not go to the attorney, but instead is paid to the court.

Chapter 13 Cases. Court costs for a Chapter 13 are $274. In the District of Maine, the Bankruptcy Court considers $2,800 as the attorney's usual fee. Along with most other bankruptcy attorneys who practice in this area, this is the fee that I usually charge. This is a lot of money for most people, and it would be difficult, if not impossible, for many to pay this amount plus court costs at the time of filing. Fortunately, the Court allows for payment of the fee through the plan. Usually, some portion of the fee is paid at the time of filing, together with the court costs. A workable amount of the fee paid at the time of filing often is $1500 (in addition to the court costs); however, this is subject to negotiation between us.

How Do I Pay the Fees and Costs?

In a Chapter 7 case all fees and court costs must be paid prior to the time that the petition is filed with the court. Any other arrangement, such as an agreement to make payments after filing, is not allowed by the court and is unenforceable. If payment of these funds all at once presents a problem, one possibility is to make payments over time prior to filing. Once you have paid a retainer amount that we agree on, you may advise your creditors that you have retained me. My office will confirm this with your creditors, and for a short period of time these creditors, unless they have already filed suit, may stop or slow down their collection attempts-hopefully, long enough to enable you to gather all the necessary funds in order to file. As indicated above, most of the fees in a Chapter 13 typically are paid as part of your plan payments. As you pay the trustee on a monthly basis, the trustee will pay the legal fees over a period of time.

Usually, payment of the legal costs are paid by cashier's check, money order or cash. Payment by check is not preferable, unless we wait until the check clears before filing the petition. The reason for this is not because I don't trust my clients to give me a good check; rather, it is to avoid losing property unnecessarily. There is a real possibility that in a Chapter 7 case the trustee would administer whatever funds are in your bank account on the date of filing, if they are sufficient. If on that date you have a check for $750+ dollars that has not been paid, you could be in the unfortunate position of having to pay the trustee that amount of money-in effect, making your bankruptcy cost you much more than you anticipated.

What about using a credit card to pay the legal costs? I probably do not even need to mention that if you are filing a bankruptcy petition you must not use your credit card to pay for the cost of filing. However, if you have a relative or friend who is willing to help you with the expense by using his or her credit card to give you the necessary amount, this is fine. (Make sure that the transfer is a gift, not a loan. Otherwise, you will have to list this debt in your schedules.)

If you are a client who is not filing bankruptcy or if you are making another kind of payment, there is no such restriction. If you would like to discuss what arrangements would be best for you, do not hesitate to contact me.

Nothing contained herein should be construed to constitute advice for your personal situation. Furthermore, this is intended as a peripheral glance at the various options available, but by no means is this a comprehensive or exhaustive analysis of the bankruptcy laws. Whether or not you should file a bankruptcy, will vary depending on your personal situation. This decision should only be undertaken after careful consideration and analysis, and after consultation with a professional.