Cheap Ways to File Bankruptcy: How to Keep Your Costs Low

Filing for bankruptcy is expensive what with the credit counseling course fees, court filing fees and, typically, attorney fees. Fortunately, even though there’s no real way to file for free, there are ways to keep costs low. And, if you’re in a financial pinch, this can help you get back on track without falling further into debt. With that in mind, here’s the true cost of bankruptcy and some cheap ways to file bankruptcy.

Debt relief. Without bankruptcy.

Please, please, please… don’t do bankruptcy without trying this first.

The bankruptcy process is complicated — filing won’t be free

First, filing for bankruptcy isn’t free.

It’s a complicated process that requires a lot of time and comes with various fees that people don’t often think about. The most common fees include court filing fees, credit counseling course fees, and other miscellaneous costs. For those who choose to hire a bankruptcy lawyer, there are also attorney fees, which can cost anywhere from $1,000 to $3,500.

Without a lawyer, the cost of filing for bankruptcy is typically closer to $300 or $400. The only downside to this is that the process can be confusing, overwhelming, and exhausting to do alone. The more complicated your finances and assets, the harder it is to file without help.

Even if you don’t hire a lawyer, it’s worth consulting a law firm to discuss your situation before filing. Someone who specializes in bankruptcy can offer sound advice and help direct you along the best path for you. Many offer a free consultation.

There are two main types of consumer bankruptcy: Chapter 7 and Chapter 13. Both come with specific requirements and unavoidable costs, such as court filing fees. However, a Chapter 7 bankruptcy is typically cheaper than a Chapter 13.

With that in mind, here’s what you can expect to pay for bankruptcy.

Total cost to file for Chapter 7 bankruptcy: From $400 to $2,000

A Chapter 7 bankruptcy usually costs between $400 and $2,000. It’s a somewhat more straightforward process than a Chapter 13 bankruptcy and only takes about six months to complete.

The process to file for a Chapter 7 bankruptcy starts with a filing fee of around $338. It is possible to fill out a fee waiver to have this charge dropped. However, not everyone qualifies for this. Eligibility depends on:

  • Your annual income (must be less than 150% of the poverty line in most cases)
  • State of residence
  • Household size

Along with this, a judge will examine your assets, income, and total expenses. If they do not waive the fee, you will then have the option to set up an installment plan to pay it.

The next step is to participate in a personal financial management course and a credit counseling course. These usually cost between $20 and $100 each, though it may be possible to get this fee reduced or waived.

Finally, there are attorney fees. In some states and circumstances, a bankruptcy attorney can cost as low as $700. Usually, though, an attorney costs between $1,000 and $3,000, depending on the complexity of the case.

Without an attorney, a standard Chapter 7 bankruptcy will cost between $350 and $450. If you file alone, make sure you’re filing for the correct type of bankruptcy. Also, triple-check that you have all the required documents and that you’re protecting your property. Otherwise, you could end up losing assets you could have kept or paying more than you should have.

Total cost to file Chapter 13 bankruptcy: From $3,000 to $3,500

A Chapter 13 bankruptcy is usually more complicated and more expensive than a Chapter 7. This type of personal bankruptcy comes with a standard filing fee of about $313 that can’t be waived. It may be possible to pay it in installments, though.

As with Chapter 7, this process also requires a credit counseling course and a personal financial management course. These cost between $20 and $100.

Attorney fees for filing a Chapter 13 are usually higher since the process is more complex. This makes up the bulk of your costs, with an average cost of around $2,500 to $3,000. However, it might be possible to set up a repayment plan to make paying more affordable.

Credit counseling courses: Between $20 to $100

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 requires anyone who files for bankruptcy to take two courses:

  • Pre-filing bankruptcy credit counseling course
  • Pre-discharge debtor education course

The first course is offered by nonprofit credit counseling agencies approved by the Department of Justice. It must be taken, either online or via phone, 180 days before filing a bankruptcy petition with the court. The purpose of this course is to determine if bankruptcy is the best option for you or if a repayment plan would work instead. It can also make you aware of other options that can help you manage your debts.

This course lasts no more than an hour. Once you’ve taken it, you’ll receive a certificate of completion that you must show the court before you can file for bankruptcy.

After filing, you must then take a course focused on debtor education. Upon successfully completing the course, your debts can then be discharged. The purpose of this course is to teach you the skills needed to make a personal budget and manage finances better. It can also help you find better ways to deal with unforeseen expenses without resorting to debt.

Both courses cost between $10 and $50. Again, it’s possible to get these fees waived if your household income falls below 150% of the federal poverty line.

Bankruptcy filing fees

Bankruptcy filing fees cost the same across the nation. They do differ based on which bankruptcy you’re filing, though.

Chapter 7: $338

The court filing fee for a Chapter 7 bankruptcy is $338. Most people have to pay the entire fee when filing a bankruptcy petition.

However, it may be possible to get the fee dropped by filling out a fee waiver. A judge will then consider your total income, expenses, assets, and household size. If denied, you may instead have to pay the bankruptcy filing fee in installments. 

Chapter 13: $313

The court filing fee for a Chapter 13 bankruptcy is $313. Unlike a Chapter 7, this fee cannot be waived. However, it might be possible to pay it in four installments. You will need to fully pay it before discharging any debts.

Court fees: $0 to more than $100

The U.S. Court of Federal Claims provides a long list of possible court fees. These include:

  • $0.50 per page to reproduce any document and provide a paper copy
  • $31 per record to reproduce and transmit a copy of an electronic record stored outside of the bankruptcy court’s electronic case management system
  • $11 for the certification of any document
  • $23 for the exemplification of any document
  • $32 to reproduce an audio recording of a court proceeding
  • $32 per name or item conducted via electronic access of the bankruptcy court records
  • $39 for filing any document not directly related to a pending case
  • $40 witness fee
  • $32 to file an amendment to the debtor’s lists of creditors, schedules of creditors, or mailing list (may be waived)
  • $188 to file a motion to withdraw

Attorney fees: $1,000 to $3,000

When filing for either a Chapter 7 or a Chapter 13 bankruptcy, you can hire a bankruptcy lawyer to support you throughout the process. Most offer a free initial consultation, which can help you decide whether to go this route or not. Attorney fees vary based on bankruptcy type, case complexity, and your state.

Chapter 7

Chapter 7 bankruptcy attorney fees usually cost $1,500 to $2,000. In some states, they can be lower or much higher. For example, attorney fees in Colorado cost anywhere from $1,800 to $5,000+. In Kansas, meanwhile, they cost closer to $1,000 to $1,500.

Do you need an attorney for Chapter 7 bankruptcy?

While a bankruptcy attorney is optional, you should at least consult a lawyer for legal advice before filing. And, since many of them offer a free consultation, speaking with one won’t affect you financially.

A bankruptcy attorney can provide legal help in a multitude of ways. For one thing, they can go over your financial situation and break it down to determine the best course of action. They can also help determine which type of bankruptcy to file if any. Along with this, an attorney can inform you of the following:

  • Your state’s bankruptcy laws
  • Any required forms or documents to file
  • The bankruptcy court process
  • Which assets are dischargeable and which are not
  • Whether you pass the Chapter 7 Means Test

Bankruptcy code is complicated, and a single misstep cause the bankruptcy judge to dismiss your case. Having someone who specializes in bankruptcy law at your side can help ensure the entire process goes smoothly. If you’re not sure where to start, check with the local Bar Association for any law firms that offer pro bono work. Or reach out to a local legal aid group in your area to see if they offer free legal services to low-income filers.

If you’re trying to avoid attorney fees and file bankruptcy for free or at a lower cost, check out Upsolve. This nonprofit tool makes filing easier while offering free bankruptcy education. Upsolve itself is free to use, but that doesn’t mean you won’t have to pay anything to file bankruptcy.

Chapter 13

The standard attorney fees for a Chapter 13 bankruptcy are $3,000 to $3,500. Again, this depends on where you live and how complex the case is.

Although you might be able to file a Chapter 7 on your own, Chapter 13 bankruptcy is much more complicated. Because of this, it’s advisable to seek legal representation or at least speak with a qualified bankruptcy lawyer beforehand.

Bankruptcy paperwork cost: From $10 up

Both a Chapter 7 and a Chapter 13 bankruptcy require basically the same documents. That said, there are some variations based on state, district, and bankruptcy type. Speak with a bankruptcy trustee before filing to make sure you have everything you need.

Here are the most commonly required types of documents needed for bankruptcy:

  • Federal tax returns
  • Proof of income
  • Valid identification (social security card, driver’s license, passport, etc.)
  • Mortgage statements
  • Retirement and bank account statements
  • Vehicle registration form, proof of value, and vehicular insurance 
  • Any documents indicating uncommon expenses, such as alimony or child support

There are at least 23 separate bankruptcy forms with a total of around 70 pages. Some cover only the basics, while others require more detailed financial information. Getting all of them costs at least $10.

If you don’t have a high-quality printer at home, check with a public library or office supply store. These places usually offer printing services for free or at a lower cost than commercial sites.

Libraries, for example, will let you print up to a certain number of pages per day or week for free. After that, each page can cost as little as $0.15. A commercial printing store, meanwhile, can cost up to $0.55 per page.

Make sure you’re only printing single-sided pages. The court won’t accept double-sided pages. Also, never sign the original document. If you do, the court will likely refuse it and could dismiss your case. Instead, make multiple copies of each relevant form first, then sign one of those.

Common forms include:

  • All required petition forms
  • Credit counseling certificate
  • Fee waiver or installment plan applications
  • Pay stubs

Bankruptcy courts often have different requirements, so contact your local court and ask how many copies you need. While you’re at it, verify that you have all the required forms.

Costs to file your bankruptcy in person at the courthouse: $10 up

Even if it doesn’t seem like it at first, the cost of filing for bankruptcy in person can vary immensely. Things to consider include:

  • Time and cost of driving to the courthouse — gas, public transit, cab fare, parking, wear and tear on your vehicle
  • Diminished wages from hours or a day spent at the courthouse
  • Missed work for a 341 meeting with your bankruptcy trustee

Unfortunately, you have to file in person at your local courthouse. Once you get there, go directly to the clerk’s office. They will accept your bankruptcy forms and filing fee. In return, they’ll give you:

  • A bankruptcy case number
  • Name of your bankruptcy trustee
  • Time, date, and place of your trustee meeting (aka “Meeting of Creditors” or “341 meeting”)

Keep in mind that you won’t need to submit any bank statements or tax returns to the court.

Costs to mail documents to your trustee: About $10

Not all types of bankruptcy require a bankruptcy trustee, but the court will appoint a trustee for any Chapter 7 and or Chapter 13 cases. The purpose of a trustee is to oversee the bankruptcy case.

In a Chapter 7 bankruptcy, they also handle the liquidation of any nonexempt property to pay your creditors. In a Chapter 13 bankruptcy, they’ll take over any payments, including those made monthly for the payment plan.

When it comes to costs, you’ll need to mail any requested documents to your trustee before the 341 meeting. Typically, this will require a flat-rate Priority Mail envelope from USPS, which ranges between $7 and $10. Don’t forget to pay for a confirmation of receipt.

What is the difference between Chapter 7 and Chapter 13 bankruptcy?

There are two main types of personal (or consumer) bankruptcy cases: Chapter 7 and Chapter 13. Both types can discharge your unsecured debts, meaning you won’t need to pay them back. However, the way they go about it is different.

  • Chapter 7: This option is meant to give you a fresh start. It takes up to six months for the court to remove (discharge) eligible unsecured debts.
  • Chapter 13: With this option, you set up a structured repayment plan with the court that lasts three to five years, on average. During this time, you must make regular payments based on the plan. Afterward, any remaining unsecured debts are discharged.

Both bankruptcy types include certain exemptions that can protect your personal property or assets. This includes things like your:

  • Primary residence
  • Retirement accounts
  • Owned vehicles
  • Social Security benefits

That said, some debts are not eligible for discharge (or nondischargeable) by a Chapter 7 or a Chapter 13 bankruptcy. This includes:

  • Mortgages
  • Federal debts, such as tax debts or unpaid government fees
  • Auto loans
  • Child support
  • Alimony
  • Student loans

An automatic stay will go into effect

One other advantage to filing for bankruptcy is that doing so gets a bankruptcy judge to immediately issue an automatic stay.

This ensures your creditors and debt collectors can’t contact you or try to collect money from you while the bankruptcy case is pending. In other words, they can’t harass you about any unsecured debts — credit cards, medical, etc.

The automatic stay also puts a stop to any foreclosure or eviction proceedings and wage garnishment.

Other cheap options for debt relief

Since bankruptcy is typically considered a last resort, here are some affordable alternatives.

Debt settlement

Debt settlement is an agreement with your lenders or creditors to settle (reduce) your debt to a lower amount than what you currently owe. Depending on the debt and your reasoning for needing it lowered, you could reduce what you owe by around 50%. You might also be able to get them to drop any late fees.

Typically, you’ll need to offer to pay the reduced amount in a lump-sum payment or in monthly installments. Additionally, creditors don’t have to agree to settle your debts. They’ll usually only agree if they know they won’t get paid otherwise and you have a valid reason (ex. lost job).

If they agree, simply pay the agreed-upon amount and they’ll consider the rest of the debt settled. Get any new terms or payment amounts in writing to avoid potential legal issues later.

A debt settlement agency usually charges between 15% and 27% of your enrolled debt. For many borrowers, professional help is necessary. You will want an experienced negotiator going to bat for you.

READ MORE: How does debt settlement work?

Debt Management Plan

Some nonprofit credit counseling agencies offer Debt Management Plans (DMP). These plans last three to five years, on average.

With a DMP, a certified credit counselor assesses your finances and helps makes a plan to tackle your unsecured debts. Usually, they’ll try to negotiate with your creditors to lower your monthly payments, reduce interest rates, or stop late fees.

Every month, you’ll need to make a predetermined payment to the agency, which they’ll use to pay your creditors. Most plans come with an initial enrollment fee between $20 and $30. Some are low-cost, while others come with a monthly fee of about $20 to $75.

Under a DMP, you may be asked to close any enrolled credit cards. It’s possible to keep one open for emergencies, though.

Personal loan

A personal loan is a loan you can use to pay off unsecured debts such as high-interest credit cards. In some cases, you can take out a debt consolidation loan, which is a type of personal loan. Consolidating your debts often makes it easier to manage monthly payments since there’s only one loan to track. If you have good credit, you can also get a loan at a much lower interest rate, which could save you hundreds or thousands of dollars.

To qualify for the best rates, you’ll need good credit history and a 670+ credit score. You’ll also need a reliable income and a low debt-to-income (DTI) ratio.

The bottom line

Ultimately, there are some cheap ways to file for bankruptcy, but the process itself will not be free. Certain fees, such as court filing fees and educational courses, are unavoidable. However, if you’re filing a Chapter 7, you may be able to avoid attorney fees by doing it yourself. That said, it’s always recommended to consult a bankruptcy lawyer before filing for bankruptcy.

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