There are four costs to consider when filing for bankruptcy. The four fees are credit counseling/personal financial management fees, filing fee, attorney’s fee and the trustee’s fee for administrating your case.
Credit Counseling/Personal Financial Management Fees
There are two counseling courses that must be completed with every bankruptcy.
A credit counseling course must be completed before you file bankruptcy. When you complete this credit counseling a certificate will be filed with your bankruptcy petition proving you completed the course. This course focuses on your current finances and spending.
The second course, personal financial management must be completed after you file bankruptcy and before you can receive your discharge. This course offers you guidance on how to handle financial crisis and spending in the future.
The costs are approximately $20-$25 for each course. The district where you file will have a list of approved providers for each course. You will pay these fees directly to the approved provider of your choosing.
The costs of the three other types of fees associated with bankruptcy depend upon the type of bankruptcy that you file.
Costs of Chapter 13 Bankruptcy
The filing fee for filing a chapter 13 is currently $310.00. This fee can usually be paid in installments through your chapter 13 plan instead of you having to come up with this cost upfront. Therefore, you could be able to file chapter 13 with as little as $20-$25 (the cost if the credit counseling course).
The attorney’s fees are usually paid through your chapter 13 plan rather than upfront. The attorney’s fee is usually based upon the district of which you filing. Each district controls the maximum attorney fee that can be charged without court approval.
For example, currently, the maximum attorney fee that can be charged in the three Alabama districts are:
- Middle and Northern Districts of Alabama
- $3,500.00 for below median
- $3,750.00 for above median cases
- Southern District of Alabama
The chapter 13 trustee will charge a percentage for the cost in administering your plan. This fee is charged monthly from your chapter 13 payments and determined by the amount the trustee disburses in your chapter 13 case. This fee will not exceed 10%. Your Bond & Botes attorney will be able to let you know what your chapter 13 trustee administration fee is in your district.
Costs of Chapter 7 Bankruptcy
The filing fee for filing a chapter 7 is currently $335.00. Unlike chapter 13, this fee usually must always be paid upfront. In very limited circumstances, this fee may be paid in installments when you file chapter 7 bankruptcy. Also, this filing fee may be waived if you meet certain criteria.
The attorney’s fee charged with a chapter 7 is set by the attorney and is determined by a number of factors, including but not limited to: the types of creditors you have, the number of creditors you have, whether reaffirmation agreements will be requested, or whether you make above the median income. Not every attorney in a chapter 7 will perform the same services so it is important for you to understand what services your attorney is charging you for in filing chapter 7.
In the majority of chapter 7 cases, the chapter 7 trustee is paid a flat administrative fee to review and oversee your case. This fee is paid from the filing fee that you paid to file your bankruptcy.
If there is a non-exempt property that the trustee will use to pay to your creditors, the chapter 7 trustee will be paid a percentage of the amount disbursed to your creditors based upon guidelines provided under the Bankruptcy Code. Again, this is not an amount you pay directly but instead is paid from the non-exempt proceeds the trustee is able to collect. Before filing chapter 7, your Bond & Botes attorney will discuss whether you have any non-exempt property.
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Mary Pool is a shareholder of the Bond & Botes Law Offices in Montgomery and Opelika, Alabama. She holds a Bachelor of Science from Auburn University at Montgomery, and a Juris Doctorate from Faulkner University’s Jones School of Law. She has represented thousands of clients over her more than 11 years working in the bankruptcy field. Read her full bio here.