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What you need to know about bankruptcy cost

How much does it cost to file a bankruptcy petition? Unfortunately, there is no definite answer to this question. It depends. In most cases, the cost of filing a bankruptcy petition to the court is fixed. However, the expenses associated with the attorney will vary. Moreover, how one makes the payments will also differ based on where they live and the case’s degree of complexity. The cost will also vary depending on whether one files for bankruptcy under Chapter 7 or Chapter 13.

Here are a few things to know about bankruptcy, bankruptcy cost, and how to pay for it.

Difference between Chapter 7 and Chapter 13
With Chapter 7 bankruptcy, most of the debts are forgiven. With Chapter 13 bankruptcy, all the debts are reorganized into a repayment plan. Further, it reduces the overall debt owed by a person. Also, it lets a person retain certain vital assets and reduces what you owe while retaining critical assets.

Bankruptcy cost
Bankruptcy costs include two expenses: attorney fees and court filing fees. The court fees are almost always fixed. The attorney fees will vary, and the costs given here are general approximates. The fee will depend on the attorney’s years of expertise, the location, and the complexity of the case. For rural areas, the attorney fees will be far less than that in Manhattan.

Moreover, the attorney fee will differ based on whether one is filing Chapter 7 or Chapter 13. For chapter 7 bankruptcy, the average cost would be around $1,450. It can range between $1,000 and $1,750. For Chapter 13 bankruptcy, the average cost is about $3,000. Depending on various factors, it can range from $2,500 to $5,000.

In the case of Chapter 13 bankruptcy, the court governs the attorney fees in the specific district. So the fees would vary across districts. The court will review the attorney fee unless it is below a level known as “no-look.” This level is accepted to be reasonable fees. This level also varies from district to district. So it is essential to check with the local court before hiring an attorney for filing Chapter 13 bankruptcy.

Bankruptcy education cost
This is a small fee included in bankruptcy costs. It covers two courses of credit counseling. Those who put forward petitions in Chapter 7 and Chapter 13 need to complete these courses. These courses can be completed online or in person. A nonprofit credit counseling agency needs to be approached by the petitioner to take these two courses. The bankruptcy education cost for these courses has been fixed at around $50 by the Office of the US Trustee.

Tips to pay for and save on bankruptcy costs
With Chapter 13 bankruptcy, a person can retain certain critical assets. This leaves them with sufficient finances to have repayment to pay for the debt and the attorney. However, with Chapter 7 bankruptcy, the attorney needs to be paid before the case begins. If there are not enough funds to pay the bankruptcy costs, here are a few tips to follow.

Raise money
Money can be freed up for bankruptcy by minimizing the outgoing cash. Instead of repaying credit card debt, save the money for the bankruptcy cost. Also, earning extra can be helpful. Having a yard sale of additional household items and old electronics can bring in some extra cash. Borrowing money from friends and family is another way to raise some interest-free money.
Have a plan
It is possible to spread out the costs of filing fees and attorney fees in many cases instead of paying everything upfront. Many attorneys often have different payment plans. They are willing to receive their fees over an extended period. For instance, some attorneys are okay with spreading the payments over three months or even six months. However, it is crucial to set the terms and conditions of the payment in the initial meeting itself.
Hire a petition preparer
If a person is in a hurry to file a bankruptcy petition, they can hire a petition preparer. This person provides the necessary assistance to fill out the bankruptcy paperwork. They charge only an hourly fee, which can be as low as $70. There is no legal advice included in this service. However, it is useful when someone needs to have an “automatic stay” to halt debt collection efforts.

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