Bankruptcy can help individuals and corporations escape debt, but it does not come for free. Curiously, however, most individuals undergo it due to financial lack, yet declaring bankruptcy costs money. So, how much exactly does bankruptcy cost? The amount varies based on the bankruptcy type, attorney’s fees, and other costs.
Long-Term Costs of Bankruptcy
One of the biggest expenses of bankruptcy is the long-term impact on your credit score. The lower your credit score, the more difficult it will be to obtain loans or credit cards, and even if you are able to qualify, you will likely have to pay significantly higher interest rates.
- Credit Score Impact: The greater your pre-filing credit score, the greater the decline. An individual who has a 720+ credit score will experience a 200-250 point reduction, while an individual who has a credit score of 580-619 will experience a reduction of approximately 125-150 points.
- Higher Interest Rates: After you have gotten out of bankruptcy, lenders might view you as a high-risk borrower. You might qualify for a loan, but you will be charged 8% or higher in additional interest than someone with an excellent credit score.
- Long-term Effects: A bankruptcy will stay on your report for 7-10 years. It will also hurt you to be approved for an apartment, get a job, or even your insurance rates.
Eventually, you can repair your credit by paying on time, being frugal with your spending, and employing tactics such as taking out a loan with a co-signer or becoming an authorized user on another person’s credit card.
How Much Does It Cost to File for Bankruptcy?
The filing fee is paid on every case, whether you have an attorney or not. These fees are established by the U.S. Bankruptcy Court and are uniform throughout the entire nation. In very unusual circumstances, if you can prove financial hardship, you might be able to pay in installments or even have the fee waived.
Additional Court Fees
- Reopening a Case: If your case is to be reopened in the future, then you will need to pay $245 for Chapter 7, $1,167 for Chapter 11, and $235 for Chapter 13.
- Credit Counseling: You will need to take a credit counseling course before you file for bankruptcy, and that will cost you $10-$50.
Attorney Fees
It might cost a lot of money to use a lawyer, but it might win the case too. It is location-, case-complexity-, and lawyer-seniority-based.
| Type of Bankruptcy | Filing Fees | Attorney Fees | Total Cost |
| Chapter 7 | $338 | $1,450 | $1,788 |
| Chapter 11 | $1,738 | $18,000 | $19,738 |
| Chapter 13 | $313 | $3,000 | $3,313 |
- Chapter 7 Attorney Fees: $1,500-$2,500 (maybe prepaid)
- Chapter 11 Attorney Fees: $18,000+ (up to $50,000+ for complex cases)
- Chapter 13 Attorney Fees: $3,000-$5,000 (can be included in your payment plan)
Attorney fees in large cities are generally greater than those in small towns. Your case is more complicated (e.g., you own several properties, a large income, or have issues like fraud charges), you will be charged more.
How to Save Money on Bankruptcy Fees
If you are already in debt, the last thing you need to do is shell out thousands of dollars to file for bankruptcy. These are some tips to save money:
Obtain Free or Reduced-Cost Legal Assistance
A few attorneys work pro bono (for free).
Phone Legal Aid Societies or local bar associations.
Request a Fee Waiver
If you are at or below 150% of the poverty guideline, you can be eligible to have your filing fee waived.
File on form 103b on the U.S. Bankruptcy Court website.
Use the services of a Bankruptcy Petition Preparer.
They charge a nominal fee to complete forms but cannot give advice regarding the law.
File Under Chapter 13 Rather Than Chapter 7
Because Chapter 13 is a payment plan, most attorneys will let you pay attorney fees in installments.
Make Some Extra Money
Sell unwanted items online (Craigslist, eBay, Facebook Marketplace).
Get a part-time job.
Avoid paying credit card payments and apply that money to legal fees.
Help With Finances for Single Mothers, Government Assistance for Single Mothers, Single Mother Money Assistance
Single moms who face monetary problems possess alternatives to bankruptcy procedures. Before taking bankruptcy, consider government and nonprofit financial support for single mothers. Single-mother assistance programs operated by the government fund both rental assistance payments, child care programs, and food stamps benefits. Certain charities present emergency financial support to single mothers to prevent bankruptcy from becoming an initial solution.
Bank Transit Number & How It Fits Into Bankruptcy
Your Bank Transit Number (or sometimes routing number) is a unique number by which you are identified when making a deposit. If you are proceeding with bankruptcy, your attorney or trustee may ask you to provide your number when payments are being made, accounts are opened, or transactional follow-through occurs. Ensure your bank transit number is accurately verified to avoid a glitch in your case.
Final Thoughts: Is Bankruptcy Worth It?
Bankruptcy is not a straightforward choice. While it provides you with a new beginning, it does not come cheap—financially or in terms of long-term credit consequences. Before resorting to bankruptcy, consider other alternatives such as debt negotiation, credit counseling, or settlement with creditors. If bankruptcy is your best option, be sure to know all the costs and look for ways to minimize expenses.
If bankruptcy is something you are looking into, talk to an attorney or a not-for-profit agency’s credit counselor, who can walk you through it. With proper guidance, you can see this through and start your financial life over!