What does it cost to file for bankruptcy?

The cost of the bankruptcy depends on the type of bankruptcy, whether other legal services are required and other services provided by the bankruptcy firm.

Chapter 7 bankruptcy is a liquidation proceeding. All property that is not exempt from liquidation is liquidated to pay the debt. Exempt assets such as retirement accounts, 529 college savings plans and tools necessary to continue working are exempt. The primary residence in most states is exempt though there is often a limit to the amount of home equity or value of the property that can be kept. A single vehicle or two vehicles may be saved to allow you to consider getting to and from work. A simple Chapter 7 bankruptcy filing is about $300. Legal fees range from a few hundred to a few thousand dollars, depending on the complexity of your case.

Chapter 13 bankruptcy involves entering into a repayment plan with creditors. Chapter 13 bankruptcies can save more non-exempt property than Chapter 7 plan.  Filing for Chapter 13 bankruptcy costs about $300, but the types of legal services required to handle the case can range from a few hundred to a few thousand dollars.

What services can add additional costs to the bankruptcy?

•    Are you entering bankruptcy to stop a home foreclosure? Fighting foreclosure in addition to the bankruptcy can require greater legal assistance and thus cost to the bankruptcy case. A Hawaii bankruptcy lawyer can provide guidance on how to keep your home or avoid liens being attached to it being used to force its sale during bankruptcy.

•    Will the bankruptcy firm act as a financial intermediary, dealing with creditors who continue to harass you or issue payments on your behalf for the repayment plan? These services are in addition to the bankruptcy filing.

•    If the bankruptcy is challenged by creditors and is rejected, a second filing will result in additional filing fees.

•    Are tools and equipment you need to earn your living being classified as assets for liquidation or being repossessed? A Hawaii bankruptcy can help you file the necessary forms to prevent what you need to make a living from being repossessed. This can include a work truck from being taken to pay your debts, a fishing boat and hand tools used to earn extra income.

•    Are you asking the legal firm to provide the mandatory credit counseling required before filing bankruptcy? They can ask you to compensate them for those services.

•    Oops, we forgot necessary payments or need to adjust the payment plan. For example, your child support order or alimony was modified. Or you’ve had another child and need more money than was initially allocated to live on. There will be further costs to request adjustment of the Chapter 13 bankruptcy payment plan.

•    Congratulations, you received an inheritance or large bonus at work. Contact your attorney to work out a settlement or pay off of a debt under the bankruptcy plan. Then renegotiate the payment plan for the remaining debts to get out from under the bankruptcy court plan even faster.