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Filing for bankruptcy is often a last resort when you can't see a path for getting out of debt. But it comes with its own costs. These can vary depending on the type of bankruptcy, the complexity of your situation, whether you hire an attorney and the attorney's fees.
At a minimum, you might need around $350 to $500 for the required court fees and credit counseling. However, most people hire an attorney to help them prepare and file. Attorney fees can depend on location, but you might expect to pay around $1,250 to $2,200 for a Chapter 7 bankruptcy, or around $3,125 to $6,250 for a Chapter 13 bankruptcy.
What Are the Costs of Filing Bankruptcy?
The three main costs associated with bankruptcy filings are for credit counseling courses, court-related fees and attorneys.
- Credit counseling: You have to complete a pre-bankruptcy credit counseling session before filing and a pre-discharge debtor education course before your debt is discharged. You may be able to complete these online, and the U.S. Department of Justice has a list of approved agencies for the counseling session and debtor education courses. Each course might cost around $10 to $50.
- Filing and court fees: The Chapter 7 filing fee is $338 and the Chapter 13 filing fee is $313 as of late 2024. But you may need to pay additional court fees depending on the specifics of your case.
- Attorneys' fees: Hiring an attorney will likely be the most expensive part of filing for bankruptcy. Some attorneys offer flat-rate fees while others charge by the hour, and the fees can depend on the type of bankruptcy, where you're located and the complexity of your case. You may have to pay the entire amount upfront when filing a Chapter 7 bankruptcy. A Chapter 13 bankruptcy tends to be more expensive, but you might be able to pay part of the fee with your monthly payments.
Learn more >> What Is the Difference Between Chapter 7 and Chapter 13 Bankruptcy?
How Can You Reduce the Costs of Filing Bankruptcy?
There are several ways to potentially reduce the cost of filing bankruptcy:
- Get a free consultation. Attorneys and nonprofit credit counselors may offer a free initial consultation. It could be a good way to compare attorneys, find out if bankruptcy is a good idea and figure out how much your filing will cost.
- Explore free and low-cost legal resources. Legal clinics and legal aid foundations may offer free or low-cost consultations and representation. You can also search for low-cost referral services, which might help you find an attorney who charges you a low fee to answer specific questions about your case.
- Apply for fee waivers. If you're filing for a Chapter 7 bankruptcy, you might qualify for a fee waiver if your household income is under 150% of the poverty line for your family size and location. The fee waiver application has the instructions and income limits. Credit counseling agencies may offer similar fee waivers for the two required courses.
- Represent yourself. You can represent yourself rather than hire an attorney. But if you think this might be a good idea, look for free assistance gathering information and filling in forms from courts' self-help programs. The Upsolve nonprofit also has a free Chapter 7 bankruptcy tool that you can use to prepare the required forms.
Learn more >> Should You Hire a Bankruptcy Attorney?
Alternatives to Bankruptcy to Consider
Bankruptcy isn't necessarily a bad option if you're struggling, especially if you're facing foreclosure, repossession or an eviction. But filing for bankruptcy can hurt your credit score, and a record of the filing can stay in your credit reports for up to 10 years (for a Chapter 7) or seven years (for a Chapter 13).
Bankruptcies also won't discharge every debt. For example, alimony, child support, criminal fines, taxes, some secured loans and student loans won't necessarily be discharged even if you file for bankruptcy.
Consider all your options, including these alternatives to bankruptcy:
- Refinance or consolidate debt. If you have good credit, you might qualify to refinance or consolidate debts to make your payments more manageable. For example, if you use a personal loan to pay off several credit cards, your monthly loan payment might be lower than the sum of your credit cards' minimum payments.
- Sell assets to pay off the debt. You might be able to sell assets, such as collectibles, a second vehicle or investments, to pay down or pay off some of your debts. The bankruptcy court might force you to sell some of these assets anyway, so it could be a good option for avoiding the cost and other negative effects of filing.
- Work with a credit counseling agency. In addition to offering bankruptcy-related education, many credit counseling agencies offer budgeting and debt management assistance. If you're struggling with unsecured credit cards and loans, one option might be a debt management plan (DMP). The credit counselor can try to get your creditors to waive fees, bring past-due accounts current and lower your interest rates or monthly payments to help you pay off the debts. Although you generally can't use credit cards while you're on a DMP, they might help you save a lot of money.
- Try to negotiate and settle with your creditors. You might try reaching settlement agreements with your creditors or debt collection agencies. A settlement allows you to pay less than you currently owe to close out an account. It can stop collection calls, keep the debt from haunting you and help your credit. However, be careful if you're considering hiring a debt settlement company, because some companies take your money without offering much assistance or overall savings.
- Look into loan hardship programs. If you're struggling to afford payments because of a temporary setback, such as a lost job or medical emergency, your creditors might offer a hardship accommodation. These could include temporarily lowering your payments or allowing you to skip payments.
- Ask for loan modifications. A loan modification will permanently change the terms of your loan, potentially lowering your monthly payment or interest rate. Lenders might be willing to modify your loan if you can't afford payments right now but will be able to afford payments based on the new terms.
- Do nothing. Some people who don't have many assets or much income may be "collection proof" or "judgment proof." Even if creditors sue them and get a judgment, the creditors can't garnish their income or assets. They might want to get collectors to stop contacting them and then focus on improving their financial situation—or improving their life within their limited means—rather than filing for bankruptcy.
Learn more >> 8 Things to Consider Before Filing Bankruptcy
The Bottom Line
Filing for bankruptcy can be expensive, especially if you're trying to file a complex Chapter 13 bankruptcy and get on a more manageable repayment plan with your creditors. However, there are options for reducing the costs, and assistance may be available for low-income households. You can also explore alternatives that may be less expensive and better for your credit or overall financial situation.
