The Costs Involved when Filing for Bankruptcy

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Thousands of people across the country each year are filing bankruptcy. If you find that you have gotten into debt that has overwhelmed you and you feel after checking out the possible alternatives that you have no other way out, filing for bankruptcy may be the option you need to find relief (you really need to weigh the pros and cons of filing first). However, the cost of filing bankruptcy is not free. It can involve a lot of time and money on your part. There are some costs to bankruptcy that you may want to be aware of before filing and getting your bankruptcy started.

Gathering the paperwork - you'll need to get copies of your credit report and tax returns in order to fill out and file your paperwork. You may be able to obtain a free credit report, or you may have to purchase them. In addition, and fees you pay to an accountant regarding your tax returns may be another added expense. It might be best to gather as much of the paperwork yourself as you possibly can from a financial standpoint.

Credit counseling costs - in addition, you'll need to undergo credit counseling and provide proof of that to the court when you file. You'll need to take time to attend the counseling service (though there are some online credit counseling services available) as well as pay any fees involved with obtaining the service and necessary certificate and budget plan you need to file.

Legal fees - if you've obtained legal counsel, you'll also have to pay the fees involved with their services. Some attorneys charge a flat rate for bankruptcy cases while others charge per hour. Some require payment up front while others may allow you to make payments if they feel you'd adhere to the agreement. (See also options for filing for bankruptcy without legal representation).

The fees involved with an attorney will vary greatly depending on your location, the chapter you file and various other factors. You should figure on your attorney fees for a personal bankruptcy case being at least $1500 and in some cases, several times that.

You will need to pay filing fees to file bankruptcy with your local bankruptcy court. The fees vary based on the chapter you are filing, but they shouldn't amount to more than $300 in cost.

Keep in mind that you will need several copies of your paperwork, so costs for printing, copying, mailing and other associated costs of creating the amount of paperwork required will also be a factor. In addition, should you need to requests extensions or file additional court documents, you may incur extra court filing fees associated with them (if any).

Missed work - this is one many people don't stop to think about. Whether your filing yourself (pro se) or are utilizing a lawyer, your time and presence will be required for a variety of things (meetings with the lawyer, time to meet with accountants, attendance of your 341 meeting, time to go to the courthouse and file - you get the picture. You may want to factor into your projected cost of bankruptcy how much work you expect to miss and how much income you will also miss as a result.

Emotional costs - while the emotional toll of filing bankruptcy doesn't involve money, it is a very real cost of filing. It may be stressful to gather the paperwork, do the credit counseling and have every aspect of your financial life scrutinized with your mistakes being highlighted for the world to see.

In addition to the stress involved directly from filing, you may find yourself under added stress during a Chapter 13 where your bankruptcy could go on for 5+ years. You'll also likely find yourself watching your credit record as you do your best to figure out how to rebuild your credit, and your life, after filing for bankruptcy.


That said, sometimes bankruptcy is the only option left. And if that is the case for you (a choice only you or your attorney can make) just be aware that there are costs associated with filing bankruptcy that may or may not be obvious and be prepared to meet the financial and emotional tolls you may be required to pay.


Related Articles:

+   Learn about various alternatives to filing bankruptcy
+   Information about filing for chapter 7 bankruptcy
+   How to choose a bankruptcy lawyer before filing for bankruptcy
+   What you need to know about credit counseling services
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