How much does bankruptcy cost? The answer is “it depends.”
The most important factors are what type of case you’re filing (Chapter 7 or Chapter 13) and how complicated your case is. Basically, there are three kinds of costs associated with filing a bankruptcy case: lawyer fees, court fees, and “other.”
Court Fees: These are the most straightforward, so let’s start here. At the time of writing (June 3, 2014), the fees for filing a bankruptcy case are: $335 for a Chapter 7 case and $310 for a Chapter 13 case.
“Other”: Next, let’s take “other.” There are a number of miscellaneous fees associated with filing a bankruptcy case. The main ones are the costs of taking the pre-filing class and the post-filing class. If you search online, you’ll be able to find different providers that charge varying amounts, but they’re usually approximately $30 each. Additionally, your lawyer needs to do his/her due diligence. That includes such items as credit reports, tax transcripts, real estate title searches, and appraisals. Again, costs vary for these items.
Lawyer Fees: Lawyer fees are usually the largest cost associated with filing a bankruptcy case. Unfortunately, it’s impossible to say exactly what your lawyer fees will be: Every case is unique, and the fees will be higher the more complicated your case is. (For example, business ownership, home ownership, tax issues, pending lawsuits, special motions to be filed, etc., are all reasons why a lawyer might charge you additional fees.) Also, different lawyers take different approaches to fees, especially with regard to retainer amount and to hourly rate vs. flat fees.
As a general rule of thumb, lawyer fees for a Chapter 7 case will usually be lower than if the same case is filed as a Chapter 13. But the two kind of cases accomplish different things, and one shouldn’t choose one over the other based on lawyer fees. Lawyer fees in a Chapter 7 case will almost always have to be fully paid pre-filing, while in a Chapter 13 case, a portion of the lawyer is often paid through the Chapter 13 plan.
One court where I practice, the Oakland Division of the Northern District of California, publishes a document entitled “The Rights and Responsibilities of Chapter 13 Debtors and Their Attorneys,” which establishes guidelines for flat fees in a Chapter 13 case. Those guidelines provide for lawyer fees of $6,000 if the client operates a business, $4,800 if he or she does not. The San Francisco Division publishes a similar document, but there the court uses a “cafeteria plan” to determine lawyer fees, with the fees being determined by the specific issues involved.
Sadly, there’s no way to answer the question “How much does bankruptcy cost” with any specificity in a blog post. Ultimately, the best way to get an exact answer to that question is to call two or three lawyers who offer free initial consultations, meet with them, and see what they say.