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.
This article is not intended to be legal advice, but a simple
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.