Attorney Fees To File A Bankruptcy
Interviewer: In terms of your fees, are they different for a 7 versus a 13? Is it more of a burden for someone to file one or the other?
John Reade: A Chapter 13 is substantially more expensive than a Chapter 7. In a Chapter 13, some of the fees that are charged can be paid through what’s called a, “Chapter 13 Plan,” or over a period of time. However, most attorneys still require that a certain amount be paid upfront or before they file a Chapter 13 bankruptcy, and then they agree to be paid the rest of it through Chapter 13 Plan payments.
In a Chapter 7, since there is no payment plan, over a period of time, the attorney fee has to be paid in full before a bankruptcy is filed. However, I have clients who pay so much a month, and after the fee is paid, then their bankruptcy is filed.
Some People Are Surprised at the Fees Associated with a Bankruptcy Filing
Interviewer: I’m sure there is some confusion. People must think, “I’m filing bankruptcy. How could it cost so much?” Is it correct that the fees have gone up with bankruptcy legislation, and it just costs more money to prepare a bankruptcy?
John Reade: Correct. Some clients come in having no idea how they are going to pay for the filing. Sometimes they wait to get a tax refund, or they get a loan from a family member or friend to pay for the bankruptcy.
In certain instance these future clients are paying their unsecured creditors large sums before they come in to see me. My advice will usually be to stop paying the unsecured creditors, if you are going to file bankruptcy and discharge that debt. One can often use the money saved by not paying their unsecured creditors to pay for the bankruptcy.