How much does it cost to file a chapter 13 bankruptcy?
Short answer: typically around $500 to $800 to get things rolling.
I am going to split this question into two sections. First, I will discuss how much money you will need upfront to file. Second, I will discuss how much money you will pay in total over the course of your chapter 13 plan.
The bulk of what a bankruptcy attorney will earn on a chapter 13 plan is earned through chapter 13 plan payments (an amount you will pay every month to the chapter 13 trustee) which take place over a three-year or five-year period. Because of this, your bankruptcy attorney doesn't necessarily need any money upfront because he will get paid through the plan. But he is also taking a risk on getting paid because he may or may not be able to confirm your case. You will sometimes see attorneys advertise a "no-money-down" chapter 13 and these are the attorneys that will get paid solely through plan payments. You will still need to pay the Court filing fee but this can be paid in installments after you have filed.
Many attorneys, however, have a different approach. Many chapter 13 attorneys will require between $500 and $800 to get your chapter 13 filed. Part of that amount, $310 to be exact, will be used to pay the Court for the filing fee. The rest of it will be used as attorney's fees to cover the attorney's risk just in case your case doesn't get confirmed so he will at least be able to earn something.
Total Amount Paid Through Plan
I bet most people who file for chapter 13 don't know how much their attorney will make through the plan, although this is disclosed on the bankruptcy petition. In 2010 the presumptive fees for chapter 13 cases were set by the bankruptcy court. Here is the breakdown from the court's website.
$3,000.00 - in below median income cases with $150/mo payments for 36 months or less
$3,250.00 - in all other below median income cases
$3,500.00 - in above median income cases
This amount will be paid to your bankruptcy attorney over the course of three or five years. The trustee will also get paid about 10% of the total amount of payments you make which can range from a few hundred dollars to a few thousand dollars.
If your plan is not returning any money to unsecured creditors (the lowest amount you can pay) and you have a three-year plan then you will pay around $3,300.00 over 36 months which equals out to just under $100 a month. That is the bare minimum you will have to pay.
If you have tax debts or other priority or secured debts then your plan payment, and consequently the total amount that you will pay, will be more.
While this might seem like a lot of money, especially for those filing for bankruptcy, it does take quite a bit of time for a bankruptcy attorney to confirm a chapter 13 case. And the chapter 13 monthly plan payments are almost always easier to make than the alternatives.
Posted by Sean Wood