Kentucky Bankruptcy Law

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Making Chapter 7 bankruptcy more affordable

First of all, on this anniversary of the 9/11 terrorist attacks, I want to acknowledge the sacrifice of so many Americans in keeping the nation free. Thank you all!

The filing fees charged by the United States bankruptcy court are no small matter. The court charges $306.00 to file a Chapter 7. This is anywhere from 1/3 to 1/4 of the attorney fees most attorneys charge for a basic consumer bankruptcy. Filing fees for a Chapter 7 are higher than for any other lawsuit (other than Chapter 9 or 11 bankruptcy). Part of this comes from the desire for the bankruptcy courts to be self-sufficient rather than draining tax dollars. Part of it supports the appointed trustee program since $60.00 of the fee goes to the Chapter 7 trustee for their work.

The attorney fees in the typical Chapter 7 consumer bankruptcy need to be paid prior to filing the petition. Otherwise, they become an unsecured debt discharged within the bankruptcy. This is because most Chapter 7 cases are “no-asset” cases. Everything the debtor owns is covered by an exemption and so there is nothing to liquidate to pay priority and unsecured debts. Also, though no one really is concerned much about it, this makes your attorney a creditor in your case.

One make to make the Chapter 7 more affordable, then, is to pay the filing fees of $306.00 post-petition. Your attorney has to file an application for this special consideration along with the petition, but the courts routinely approve them. The fees have to be paid in full within 120 days of the date of filing the petition. This can be done by mailing a money order (no personal checks) to the court clerk for $76.50 or multiples of $76.50. You can also pay in cash if you go down to the clerk in person, but be sure to have the exact amount needed because they will not make change.

By paying the filing fees after filing the bankruptcy, you cut the overall up-front cost of the filing by a good 20%. This makes it a little easier to get the case filed. Once in bankruptcy, any garnishment stop and so you should more readily be able to make the installment payments.

September 11, 2013 - Posted by | attorney fees, Bankruptcy, Chapter 7, Discharge, Exemptions, Pre-filing planning | , , , , , , ,

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