How Much Does it Cost to File for Bankruptcy?
If you are thinking about filing for bankruptcy, you probably have lots of questions. Along with questions about what you can expect both during and after the process, you might also have questions about the costs involved.
So, how much does it cost to file for bankruptcy?
Like so many questions about the bankruptcy process, the short answer is, “It depends.” In this article, bankruptcy lawyer Georgette Miller provides an overview of the specific costs involved and what you can reasonably expect to pay.
Understanding the Costs Involved in Filing for Bankruptcy
There are three main costs involved in filing for bankruptcy. While the idea of incurring these costs while you are in debt can seem overwhelming, it is important to approach the bankruptcy process with a focus on the future. As discussed in greater detail below, the costs involved in filing for bankruptcy can be well worth it, and filing for bankruptcy can help you save far more than these costs in the long run.
The main costs involved in filing for bankruptcy are:
1. Bankruptcy Filing Fees
To formally start the bankruptcy process, you will need to file a petition in the U.S. Bankruptcy Court. The filing fees for bankruptcy petitions vary not only by state but also by the type of bankruptcy filing. In New Jersey, the bankruptcy filing fees are:
- Chapter 7 Bankruptcy – $338 filing fee (includes a $78 administrative fee and $15 trustee fee)
- Chapter 13 Bankruptcy – $313 filing fee (includes a $78 administrative fee (trustee fee not required))
These are the two main types of consumer bankruptcies, and if you are thinking about filing for bankruptcy to eliminate or reduce your personal debt, you will most likely be filing under Chapter 7 or Chapter 13. With that said, there are other options available (including specific options for businesses and business owners). When you consult with an experienced bankruptcy lawyer, your lawyer will help you evaluate all of your options and choose the best path forward based on your individual circumstances.
2. Credit Counseling Fees
When you file for consumer bankruptcy, you are required to complete credit counseling as part of the process. The U.S. Bankruptcy Court for the District of New Jersey maintains a list of approved credit counseling agencies in the state, and you will need to choose one of these agencies for your counseling program.
Different credit counseling agencies charge different fees—and you can (and should) shop around before you choose one. Typically, you can expect to pay somewhere in the range of $20 to $100. However, if you cannot afford to pay, you may qualify for a fee waiver.
3. Legal Fees
If you hire a lawyer to represent you (which you absolutely should), you will also incur legal fees during the bankruptcy process. While hiring a lawyer costs money, it can also save you money in various ways.
One way hiring a lawyer can save you money is by helping you avoid unnecessary filing fees. It is very easy to make mistakes when trying to file for bankruptcy on your own, and some mistakes can cost you. For example, if you need to amend your bankruptcy filing, this may require payment of an additional filing fee. If the U.S. Bankruptcy Court denies your bankruptcy petition and you need to file a motion to reopen or start the process again, this will cost you hundreds of dollars as well.
Even more importantly, when you hire a lawyer to represent you, your lawyer can help ensure that you maximize the benefits of your bankruptcy filing. When you file for bankruptcy, the outcome isn’t automatic. The judge isn’t simply going to erase your debt or give you a new “reorganized” payment plan. When going through the bankruptcy process, you need to know what to ask for, you need to know how to ask for it, and you need to be able to prove that you are legally entitled to the relief that you are seeking. None of these are easy, and they are steps with which an experienced bankruptcy lawyer can help.
As a result, hiring a lawyer to help maximize the benefits of your bankruptcy could save you hundreds of dollars per month—if not more. Over the next several years, this could easily add up to tens of thousands of dollars in savings. This savings will far exceed the relatively modest cost of hiring a lawyer to represent you.
Is Filing Bankrupt Worth It?
Given these costs, is filing for bankruptcy worth it?
If filing for bankruptcy makes sense for your individual circumstances, then the answer is a clear “Yes.” While there are costs involved in filing for bankruptcy, you will more than recoup these costs over the long term. Whether you file for bankruptcy under Chapter 7 and eliminate many (if not all) of your debts or you reorganize your debts under Chapter 11, you will pay significantly less than you currently owe—and you will truly get a new financial lease on life.
You can also think about it this way: If filing for bankruptcy wasn’t worth it, then people wouldn’t do it. Each year, hundreds of thousands of individuals and businesses obtain financial relief through the bankruptcy process. The bankruptcy laws exist for a reason, and the bankruptcy process is designed to ensure that it is accessible to those who need it.
Finally, while reducing (or eliminating) your debt load is the main reason to file for bankruptcy, the process can have several other benefits as well. These benefits further add to the value of filing for bankruptcy, and understanding all of the benefits is important for making an informed decision.
Request a Free Consultation with Bankruptcy Lawyer Georgette Miller
If you have more questions about filing for bankruptcy in New Jersey, we invite you to get in touch. To request a free consultation with bankruptcy lawyer Georgette Miller, please call 866-964-6529 or contact us confidentially online today.