How Much Does It Cost to File for Chapter 13 Bankruptcy?
Learn about the complete costs associated with Chapter 13 bankruptcy, from initial fees to ongoing payment structures.
Chapter 13 bankruptcy provides a structured pathway for individuals with consistent income to manage and repay debts over an extended period. This process allows debtors to keep assets, such as a home or car, while adhering to a court-approved repayment plan. Understanding the costs associated with filing for Chapter 13 is important for navigating this financial reorganization.
Official Filing Fees
Filing for Chapter 13 bankruptcy requires payment of mandatory fees directly to the bankruptcy court. These fees are set by federal law under 28 U.S.C. § 1930. The total cost for filing a Chapter 13 petition is $313, which includes a $235 filing fee and a $78 administrative fee. These amounts apply to both individual and joint petitions.
Debtors typically pay these fees upon filing. If a debtor cannot afford to pay the full amount upfront, the court may permit payment in installments. An application to pay in installments must accompany the petition.
Installment plans usually involve up to four payments, with the final payment due within 120 days of filing, though a 60-day extension may be granted. Failure to adhere to the payment schedule can lead to dismissal of the case.
Attorney Fees for Chapter 13
Attorney fees are often the most significant expense in a Chapter 13 bankruptcy case. These fees are not fixed and depend on factors such as case complexity, attorney experience, and geographic location. Most bankruptcy courts establish “no-look” or “presumptively reasonable” fees, which are maximum amounts an attorney can charge for routine services without detailed court review. These presumptive fees can range from $3,000 to $5,000, varying by district.
Attorneys typically charge a flat fee for Chapter 13 cases, covering essential services. These services generally include preparing and filing the bankruptcy petition, schedules, and the Chapter 13 repayment plan. They also involve attending the Meeting of Creditors and handling basic plan confirmations.
Additional fees may arise if the case involves complexities or requires services beyond the standard flat fee. Examples include responding to creditor objections, negotiating with creditors, or representing the debtor in adversary proceedings.
Filing motions to value collateral, amend a confirmed plan, or incur new debt can also lead to additional charges. Attorneys must disclose their fees to the court, and these fees are subject to court approval.
Additional Costs and Expenses
Debtors incur other expenses when filing for Chapter 13 bankruptcy. These additional costs contribute to the overall expense.
Two mandatory educational courses are required: a credit counseling course before filing and a debtor education course before discharge. These courses typically cost between $10 and $50, with some providers offering fee waivers or reductions based on income.
Other potential expenses include fees for obtaining a credit report, which can range from $30 to $150. If assets like real estate need to be valued, appraisal fees may be incurred, typically ranging from $300 to $1,000. Minor costs, such as postage and notary fees, can also accumulate.
How Chapter 13 Costs Are Paid
Official filing fees, totaling $313, are paid directly to the bankruptcy court. While paying the full amount upfront is common, the court often allows these fees to be paid in up to four installments, with the final payment due within 120 to 180 days after the case is filed.
Attorney fees in Chapter 13 cases are typically handled through a combination of upfront payments and payments made through the Chapter 13 plan. Many attorneys require a portion of their fee as an initial retainer before the case is filed, which can vary widely depending on the firm and case complexity. The remaining balance of the attorney’s fee is then usually incorporated into the Chapter 13 repayment plan. This balance is paid to the attorney by the Chapter 13 trustee as an administrative expense over the three-to-five-year life of the plan, after the plan is confirmed by the court.
Additional costs, such as those for credit counseling and debtor education courses, are generally paid directly by the debtor to the service providers. These payments are often made before or during the bankruptcy process and are typically not included as part of the Chapter 13 plan payments. Fees for credit reports, appraisals, postage, and notary services are also usually the debtor’s direct responsibility. This payment structure aims to make the bankruptcy process more accessible by spreading out some of the larger costs over time.