Bankruptcy – What Does It Cost To File?

After I discuss the pros/cons of filing bankruptcy in my consultations with clients we get to the question that is on every one’s mind – what is this going to cost me? Bankruptcy prices vary from law firm to law firm, but most bankruptcy attorneys will charge a flat fee for the entire process. This is different than most other types of legal service where clients are billed by the hour for the work that is completed (often charging $250-$350 an hour).

At the Beaton Law Firm, in the winter of 2012 we are currently charging the following prices for consumer bankruptcy:

Chapter 7 Bankruptcy Fee: From $1250

For a consumer chapter 7 bankruptcy case I often charge $1250 for the basic legal work if the debtor has a below-average income and no business issues. If, after meeting with you and learning the facts of your case it is determined that your case will be substantially more complicated, then there may be additional charges. The higher costs are usually associated with cases where a business is involved. However, for most of my clients the fee is $1,800 or considerably lower.

The variation in fees are due to income levels and the estimated complexity of the case. Generally speaking, the high end of the range is for debtors whose income is above the median level for the state they live in. You can look up the median income levels for Massachusetts here, and you can look up the median income levels for New Hampshire here.

In addition to my fee, the bankruptcy court will charge you a filing fee of $306 and you will be required to take two credit counseling courses, which need to be paid as well as the legal fee.

I understand that when going through financial troubles the last thing you need is another bill. Because of this you will find that my legal fees are significantly lower than most bankruptcy firms in the area.

I encourage you to call other firms and ask them what their bankruptcy fees are. First, they will likely not tell you. For whatever reason attorneys are very hesitant to tell you what you are going to pay for your bankruptcy over the phone. I’m not. Second, you will learn that most firms in both Massachusetts and New Hampshire are going to charge you at least the $2,000 + the costs mentioned above, all the way up to $3,000 + costs, or even more.

While I charge a lower fee than most, I do not compromise on service. You will meet with me at the initial consultation. I will personally handle your case. If you have a question or an issue come up during the bankruptcy process you can call me directly. You may be thinking, “why wouldn’t I be meeting with you, I am hiring YOU to be my attorney!” Again I invite you to ask around. You may be surprised to learn that even though you are hiring an attorney, you may rarely actually meet with your attorney or even have access to them over the phone.

To get started, you will need a down payment, typically $500. I will work with you to set up a plan for the remaining balance.

When comparison shopping, married couples should note that I never charge additional fees to file a joint bankruptcy. So essentially at my office it is “two for the price of one.” It’s not like that at most law offices.

Chapter 13 Bankruptcy Fee: $2,500

For most chapter 13 bankruptcy cases I charge a flat fee of $2,500 for the entire 3 to 5 year process. Chapter 13 bankruptcy fees are higher, mostly due to the fact that instead of being a four month process like a chapter 7 bankruptcy, a chapter 13 bankruptcy will last anywhere from three to five years. Essentially this fee gives you an attorney for bankruptcy matters for up to five years while your bankruptcy case is active.

Again, if your case presents unique challenges or involves significant complexity, the fee may be higher. However, you will be made aware of this prior to any work being done on your case.

As with a chapter 7 bankruptcy there are additional costs of about $400 for the court’s filing fee and the credit counseling courses that have to be completed before and after the filing of your bankruptcy case. Chapter 13 bankruptcy cases are more complex than a chapter 7 bankruptcy, and so there can be additional fees.

For instance, if you want to remove a second mortgage or home equity line of credit I will need to file a motion against that bank to remove the lien. Proceedings such as this fall outside the regular chapter 13 bankruptcy fee and have an additional fee charge.

One benefit to a chapter 13 bankruptcy case is that it is not always necessary to pay all of the legal fees prior to the filing of your bankruptcy case. Sometimes some of the fees can be paid out over the three to five years of your bankruptcy case, making it less expensive for you to get started on your bankruptcy case.

What About that Advertisement for a Cheapo Bankruptcy?

You have likely seen ads around touting a bankruptcy for $500 or less. It is important to understand what they are offering and be very wary of going down that path. If you engage one of these companies you will learn that you are not hiring an attorney but instead you are hiring a document preparer that will give you the bankruptcy forms and offer to type them up for you, but you will not get legal advice. You will not have an attorney accompanying you to the Meeting of Creditors held at the bankruptcy court. You will not have professional legal counsel if things go wrong. Bankruptcy can be a complex legal process and it’s best to have a professional guide to help you through it. Even if you don’t hire me, hire another attorney. In the end you will save money and aggravation.

Massachusetts / NH bankruptcy attorney Doug Beaton offers a free bankruptcy consultation to discuss your specific situation. He can be reached at (978) 975-2608 or via email at info@douglasbeaton.com.