Everyone preparing to file for bankruptcy wants to know how much it costs.

This makes perfect sense as bankruptcy usually comes at a time when money is tight. We try to make the cost of filing a Chapter 13 or Chapter 7 the same for people at our law firm so that people do not think that they somehow are better off filing one over the other based on costs.  A chapter 13 bankruptcy requires more work than a chapter 7, but we roll the bulk of our fees into the payment plan that will be approved by the court so we can keep the initial costs low.

So, the question of how much does it cost to file for bankruptcy sounds like a straightforward question, and I hear it on a daily basis.  The answer as with almost every legal question is, “It depends.”  “Why does it depend?” is usually the next question. As we go through this blog post the “It depends” should become evident.

Ask about a payment plan and Free Credit Repair Course after Bankruptcy.

We are different in that we will allow you to pay for your chapter 7 bankruptcy with payment plans after we file for your bankruptcy.  We will also sign you up for a free credit repair course.  We are going to work with you both before and after you file for bankruptcy.

Payment plans for either $125 or $200 a month depending on how fast you want to pay off your bankruptcy.

I am going to tell you our standard fees for a Chapter 7 and a Chapter 13 right at the start so that people who are looking to compare numbers between Law Offices, bankruptcy prep companies and doing it themselves do not have to go through this entire blog post. Attorney fees at my firm for a Chapter 7 bankruptcy filed in New York or New Jersey is $1680 and we charge the standard New Jersey “Presumptive” / “No Look Fee” for a Chapter 13 Bankruptcy filing in either New York or New Jersey and take a $1000 down payment to begin the work on a standard Chapter 13 Bankruptcy.

So why $1680 for Chapter 7 Attorney Fees? ($1680 is the total cost for a single filer when all of the other costs are added together.)

This may sound like an odd number for a flat fee for bankruptcy attorney fees:  $1680 when all of the other associated costs are added together.  Before we actually file a bankruptcy we need the Court Filing Fee of $335. We run a combined 3-Credit Bureau report for single filer that costs us $33 or $53 for a joint filing. There are two court-mandated counseling courses that must be taken: a Pre-Credit Counseling course that costs $20 if you use our provider and the Second Bankruptcy Course is $15. We also have software costs that are $37 for each case filed. This totals $1680 for a single filer or $1680 for a joint filing.  You could pay for the credit counseling courses yourself separate than the bankruptcy, but the credit report we run and are costs are not negotiable. We are not making money on these, so we just pass along our costs. Many places will not make you get a credit report, but we do this so that we can be sure that you know what is being reported and make sure all of the reported information is included on your report will be included in your bankruptcy even if you do not know that it existed.  We will have you review this list and then add any other creditors that you do not see on the list. It also gives your current credit score and predicted credit score in one year if you do not have credit issues for the next year.)

If after taking the credit counseling class, you decide not to file bankruptcy all we will charge you is the cost of the class and refund any deposit you have placed with us.  If you would like a copy of the credit report with predicted score post-bankruptcy and nothing else, we charge a small service fee to cover the time of having it run and e-mailing or mailing a physical copy to you. ($53 for single, $73 for a joint credit score.)

If you do not have enough money to put all the money down at once, we will put you on a payment plan, but we will not file your petition until the full amount has been paid.  As soon as the petition is filed in a Chapter 7 bankruptcy, any money you own us will become part of the petition as we would just be another one of your creditors, so we wouldn’t be paid if we filed before the total amount due was paid.  We can accept payment by cash, check, money order or debit card.  We can accept credit cards, but not if it is yours. Basically, you are not allowed to put your bankruptcy on a credit card and then file for bankruptcy.

We also offer a post-bankruptcy credit monitoring subscription and credit Assurance Report which provides credit information provided by the national credit bureaus immediately after bankruptcy.  This service will also monitor your credit report and we will then defend you if any post-bankruptcy action related to the information that was discharged in your bankruptcy. We charge a flat fee of $250 if you require this within 60 days of filing and $500 from 61 days to 120 days.

So what is a “No Look Fee”/”Presumptive Fee” for a Chapter 13 and what does that mean?

For a Chapter 13 filed in New Jersey or New York, we require $1,250 down and charge the standard “No Look Fee” that is set out by NJ Bankruptcy Court of $4500. (see here for a discussion on the fees)  This means $3,500 of the fee is put into the chapter 13 payment plan. The bulk of our fee is included in your plan and as a firm we are motivated to make sure you can complete the plan that is devised. If you are trying to compare apple-to-apples we include the Chapter 13 court filing fee which is $310, a 3 credit bureau report, pre-bankruptcy counseling and post counseling fees in our flat fee pricing.  Double check to see what exactly you are paying for with any other provider. There are occasions when we charge more such as having to deal with multiple loan modifications in properties across multiple states or other events that fall outside a normal bankruptcy.  We will make sure you understand any additional fees and we will also be informing the bankruptcy court of these fees so we will not ever try to pull a fast

A Chapter 13 bankruptcy costs $310 to file in New York, New Jersey, and any other state you would like to name. Converting a Chapter 7 bankruptcy to a Chapter 13 bankruptcy does not require a fee, but a Chapter 13 Bankruptcy being converted to a Chapter 7 Bankruptcy has a $25 fee.  So, there are no cost savings filing at the lower cost of the Chapter 13 Bankruptcy and Changing to a Chapter 7.

The cost to file in a state should not be confused with bankruptcy exemptions, which are different by state and there are even federal exemptions that can be used. For example, New Jersey does not have a Homestead Exemption. New York has a Homestead exemption and it varies by county.

• New York, Kings, Queens, Bronx, Richmond, Nassau, Suffolk, Rockland, Westchester, and Putnam have the largest exemption amount: $165,550
• Albany, Columbia, Dutchess, Orange, Saratoga, and Ulster have the second largest exemption amount: 137,950
• Properties in the rest of the New York State have the same exemption amount: $82,775

The Federal Homestead exemption is $23,675 and doubles to $47,350 for a married couple, so in this case, using federal exemptions would benefit a New Jersey resident but not a New York resident.   New Jersey and New York both allow people to use either the state exemptions or the federal exemptions.

What is a bankruptcy exemption?

In chapter 7 bankruptcy, exemptions determine what you are allowed to keep during and after you file. If property, such as your home, car, or electronics are exempt, you may keep it. Even if the property is not exempt you still may be able to keep it if the trustee does not see selling it as a way to make a profit to pay your creditors. Or the trustee may require you to pay a portion of the value to keep the not exempt property.  In Chapter 13 bankruptcy, exemptions will determine how much you will pay certain creditors through your payment plan.

The homestead exemption only applies to your residence so you cannot use it for other properties. But if they are investment properties you may be able to cram down the loan so that you only have to pay what the value of the investment property is and not what you own on it.  So, if you are underwater on investment properties filing bankruptcy may be a no-brainer for you.

If you need more information or are interested in filing bankruptcy please contact us at (973) 200-1111 or email us at info@focusedlaw.com