Who Pays for a Bankruptcy?

There are various mandatory administrative and education fees involved in filing for bankruptcy, along with attorney’s fees if you wisely decide not to represent yourself (for key questions to ask before hiring a bankruptcy lawyer, read our article here).

Ultimately, the costs of filing for bankruptcy are borne by the filer (individual or business). However, the process is handled differently depending on whether the filing is made under chapter 7 or chapter 13. We look at each of these below.

Paying for a Chapter 7 Bankruptcy

Typically, individuals must pay 100% of all fees prior to filing under chapter 7. This includes:

  • Court filing fees (currently $335)
  • Administrative fees (currently $75)
  • Trustee surcharge (currently $15-$25)
  • Tuition for the mandatory credit counseling course (currently $14.95 per household for the online version; the in-person version can cost $25-$50).

Attorneys’ fees vary based on the specific details of each case, and can range from $1000-$4000 (and more in some cases). No two bankruptcy filings are exactly alike, and errors in the filing process can be VERY costly. The court has no patience for self-represented (a.k.a. pro se) filers who do not understand how bankruptcy works, and will almost always side with creditors who are complying with the law and properly following the process and timelines.

Paying for a Chapter 13 Bankruptcy

Chapter 13 bankruptcy involves restructuring debt and paying back creditors over a period of 3-5 years. Mandatory filing costs include:

  • Court filing fees (currently $310)
  • Administrative fees (currently $75)

Now, at first glance it may seem like a chapter 13 filing is cheaper than a chapter 7 filing, because the lists of mandatory fees is smaller, and the court filing fee in particular is lower. However, the opposite is true: a chapter 13 filing costs more than a chapter 7 filing, because it is a far more complex process that involves extensive consultation, communication and correspondence.

While there is nothing that legally forbids chapter 13 filers from representing themselves, it is NOT a good way to try and save some money — because, as noted above, the process is complex, and there are multiple phases and stages. It is also likely that the repayment plan will need to change over the 3-5 year timeline, and it is critical that this process is handled properly, or else the requested adjustments will not be accepted by the court. Generally, attorneys fees can range from about $2500-$5000 or more, depending on the specifics of each case.

Finding the Money to Pay

If you plan on filing for chapter 7 or chapter 13 bankruptcy, then it’s widely expected that you’ll stop paying unsecured creditors (and in fact, unsecured creditors assume you’ll do this as well). The money that you otherwise would have spent on these unsecured debts can be saved and allocated to pay your filing and legal costs. What’s more, if you plan on filing for chapter 13 bankruptcy, then upon approval by the court some of your costs can be integrated into your 3-5 year repayment plan.

With this being said, you should continue paying for your required living expenses such as mortgage or rent, utilities, car payment and so on, until you have consulted an attorney, confirmed that you qualify for bankruptcy (there are different rules for chapter 7 vs. chapter 13), and decided that you are indeed going to file for bankruptcy.

Learn More

If you are thinking of filing for bankruptcy and want to clearly understand the costs involved and how you can mitigate and manage the financial impact, then contact the Law Office of Charles H. Huber today. We have more than 30 years of experience filing personal and business bankruptcy cases.