How Much Does It Cost to File Chapter 7 Bankruptcy?
If you are considering filing Chapter 7 Bankruptcy, the first questions to ask are what it will cost, and is the expense worth it. If you’re deep in debt, every penny counts, so you need to be cost-conscious. Still, you need an experienced attorney who provides personalized services that match your unique circumstances.
An attorney who brings experience and personalized service to your case is always your best option.
Hiring an experienced attorney who will take to time understand your unique financial situation is the paramount consideration. Obtaining a discharge and eliminating your debt is more important than the actual cost, as long as the cost is reasonable.
Do a cost/benefit analysis:
Bankruptcy has the immediate benefit of a good night’s sleep. The automatic stay goes into effect, and your creditors must stop all collection activity, including harassing letters and phone calls. I find the peace of mind bankruptcy affords our clients is usually worth a lot.
On the downside, bankruptcy puts a black mark on your credit report that will remain there for approximately 10 years. This will not prevent you from getting a new credit card. Our clients received offers for credit within one to two years of receiving their discharge from the court. However, bankruptcy will affect your ability to rent an apartment or get a new mortgage or car loan. Sometimes, you will pay more for credit because you filed bankruptcy.
Next, grab a pencil and paper.
In Chapter 7 Bankruptcy, you will discharge most of your unsecured debt. Unsecured debt includes personal loans, credit card debt, and unpaid medical bills. Many of our clients have unsecured debt of $20,000 or more; some owe $100,000 to credit card lenders. Discharging that much debt is almost always worth the cost of a good bankruptcy attorney.
Keep in mind that your mortgage and car loan are secured debts that can’t be discharged. Also, support payments, taxes, and student loans are considered priority debts and generally not dischargeable. Nevertheless, eliminating your unsecured debt often provides money for secured and priority obligations that can’t be discharged.
The Dollars and Cents of Hiring a Chapter 7 Bankruptcy: Attorney Fees
Your legal fee for a Chapter 7 case will depend on the attorney you hire.
An attorney who specializes in high-volume, low-cost bankruptcy may not be the right choice. Will that attorney give you the time and attention you need when you need it most? Maybe not! A cookie-cutter bankruptcy lawyer who relies on paralegals will not take the time to get to know you or understand the nuances of your unique circumstances. Paralegals, no matter how skilled, are not lawyers and may not give you legal advice.
Many attorneys advertise low fees. You have seen their ads –
“File Bankruptcy only $995.”
“$0 Down Bankruptcy, Get Started for Free.”
“A lawyer’s time and advice are his stock in trade.”
Abraham Lincoln
In my experience, these are bait and switch tactics designed to get you in the door. You’ll find the price increases quickly based on “your special situation.” It’s like going to a car dealership only to find the advertised vehicle isn’t available, and the available vehicle is priced much higher.
According to a survey conducted by Lawyers.com, the average legal fee for a New Jersey Chapter 7 Bankruptcy is $1,500 for an individual filer and $1,800 for spouses and civil union partners who file jointly. Prices are slightly higher in northern New Jersey. The survey also reported that clients wanting a “hands-on” attorney who provides personal service rather than one who delegates the work to paralegals can expect to pay around $2,000 -
Some people want to work in close collaboration with their bankruptcy lawyer, while others prefer as little contact as possible. The level of attention you require can be a factor in determining your fees.
For example, firms practicing bankruptcy law exclusively often save money by hiring paralegals to prepare your paperwork. An attorney will review your petition for accuracy but might not take an active part in the entire process.
Other lawyers might take a hands-on approach and be there to consult with you throughout the entire process. You can expect to pay more for that service.
Overall, the Lawyers.com survey found that filers statewide paid as little as $500 and much as $5,000 for a Chapter 7 case.
To determine if a potential lawyers is right for you, ask these questions -
Who will analyze my financial situation, you, or a paralegal?
Who will complete my paperwork, you, or a paralegal?
Will I be charged for phone calls and eMails about my case?
Who will answer my questions when I call the office?
Will you or another attorney go with me to the 341 meeting of creditors?
Does your fee cover the services I will need? What services are excluded from the base fee?
If additional costs will be charged, what is the hourly or base rate I can expect to pay?
Court Fees & the Cost of Credit Counseling
Besides legal fees, Bankruptcy filers must pay a $335 filing fee to the court. Also, every person who files for bankruptcy must take and pass two credit counseling courses. The courses cost approximately $20 each
If you are considering bankruptcy, take time to find an experienced attorney who is willing to invest time in you and your case. Interview several attorneys and meet the paralegals and legal secretary who handle your attorney’s files. Do this because you’ll hire the team, not the lawyer.
When
you meet with Ernest G. Ianetti, Esq., we’ll take time together to discuss your situation and get you started on the right path to financial freedom.
The Law Firm of Ernest G. Ianetti, Esq. has over 30 years of professional experience. If you are considering Chapter 7 bankruptcy, we can help you. To schedule a FREE Consultation, click here.
Ernest G. Ianetti, Esq., represents clients in Chapter 7, Chapter 13, and Chapter 11 Bankruptcy. Our office is conveniently located in the Rockaway Townesquare Mall complex. We represent clients from Morris County and surrounding areas, including Sussex County, Essex County, Union County, and Passaic County.
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This website and its contents are attorney advertising. The information and materials offered on this site are for general informational purposes only, do not constitute and should not be considered legal advice, and are presented without any representation or warranty whatsoever, including as to the accuracy or completeness of the information. No one should, or is entitled to, rely in any manner on any of the information at this site. Parties seeking advice should consult with legal counsel familiar with their particular circumstances. Communication with the law firm through this website does not create an attorney client relationship. The law firm is a debt relief agency. We help people file for bankruptcy under the United States Code.
