How Much Does Chapter 13 Bankruptcy Cost?

Chapter 13 is a great tool for paying back your debts over time, especially mortgage and vehicle back payments. In fact, many clients prefer to file a Chapter 13 because of the flexibility inherent in the payment plan, as most attorney fees are paid through the Chapter 13 Plan. Over the course of providing hundreds of free consultations, the most common question is how much a bankruptcy costs, and rightfully so! Here's a rough explanation of how it works:

1. Flat Fees for Chapter 13 Cases

Like a Chapter 7, we will quote you a flat fee for a Chapter 13 bankruptcy case that will cover our services throughout the entire case. You will never have to worry about emailing or calling too much and a lawyer running up the bill on you. One flat fee takes care of everything, and we agree on that fee in advance so there is no confusion later on.

2. No Need to Pay the Whole Fee Up Front

The filing fee for filing a Chapter 13 case is $313.00. This is paid to the attorney, who turns around and pays that directly to the court on your behalf. Most bankruptcy attorneys require a retainer up front to file a Chapter 13 bankruptcy case. Some firms may charge less, but the firms that do charge less are typically looking to just file as many cases as possible with the hope that at least a small percentage of their clients will make their plan payments.

You see, Chapter 13 attorneys get paid through the plan filed with the court. If you don't make your payments, we don't get paid. This is why most experienced attorneys require a reasonable retainer up front. The amount required up front will vary on a case by case basis.

3. In Most Cases, Fees Come from Your Creditors

Unless you are paying back all of your unsecured creditors (credit cards, medical bills, personal loans, etc.) 100 cents on the dollar, attorney fees will come from the payments you are making to the Chapter 13 trustee. Your payments to the trustee are based on your monthly income and expenses and are not affected by attorney fees.

The attorney must apply to the court for fees through the Chapter 13 plan. Any fees received would have gone to pay your unsecured creditors. Instead, the attorney is paid those fees. In essence, your unsecured creditors are paying the attorney fees. Typical fees in a Chapter 13 case range from $3,800 to $5,500, so that amount will go to your attorney instead of lining your creditors' pockets.