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Talk about piling insult onto injury: The cost of
declaring bankruptcy has increased.
Most debtors expect to pay filing fees, and many know
that they probably will be better off if they have a lawyer to help
resolve their debt problems, despite the cost.
But some additional fees aren't as obvious or as well-known
and could become a major problem, inflating your list of overdue
obligations.
Adding to the costs, lawmakers agreed last year to
increase the bankruptcy court filing fees as part of the Deficit
Reduction Act. The fee changes went into effect in April and
cover the bankruptcy petition conversion of a Chapter 7 or Chapter
13 bankruptcy to a Chapter 11, which is used for business bankruptcies
and some miscellaneous expenses.
Debtors making changes to their bankruptcy cases and/or
proposals for additional actions also will pay more. Plus, they
will have to avoid some mishaps such as bad checks and searches
for missing records if they don't want to add to their debt.
| Here's a look at some of the
fees you will incur, both expected and otherwise, before,
during and after the bankruptcy process. |
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| 9 actions that
cost you cash |
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1. An attorney
Attorney fees vary from state to state. Brad Botes, consumer bankruptcy
attorney in Birmingham, Ala., and former executive director of the
National Association of Consumer Bankruptcy Attorneys, found that
most practitioners around the country charge as little as $600 to
$700 for a Chapter 7 bankruptcy, up to as much as $3,500.
For Chapter 13 bankruptcies, many courts set a fee
limit based on local rule or general order, according to Jane Limprecht,
spokeswoman for the Executive Office of the U.S. Trustees, which
oversees administration of bankruptcy cases.
"This is not a maximum or minimum fee,"
Limprecht says. "It is an amount below which an attorney may
apply to the court for fee approval in a simplified fashion, usually
without a detailed listing of hours expended. The fee limit and
other details vary from court to court."
Botes says costs for Chapter 13 cases have ranged
from as low as $1,500 to as high as $3,500.
2. Credit counseling
Consumer credit counseling, mandatory under the new law, usually
costs $50 each for the pre-filing credit counseling and the pre-discharge
financial education course, although the services must be provided
regardless of the debtor's ability to pay. The service is offered
over the phone, in person and on the Internet.
3. The bankruptcy petition
Debtors seeking to attain relief from their debts have to file a bankruptcy petition. That's going to cost.
The amount for a Chapter 7 bankruptcy is $299. This includes the statutory filing fee of $245, a $39 administrative fee and the $15 case trustee fee.
The amount for filing a Chapter 13 is $274. This includes the statutory filing fee, which is $235, and the $39 administrative fee.
"The fees are broken down, because they must
be allocated among the U.S. Treasury, the U.S. Trustee System and
the judiciary," says Tony Anastas, chief deputy clerk for the
U. S. District Court, District of Idaho.
The Chapter 7 trustee fee is used to pay the trustee,
who doesn't receive a salary. Chapter 13 trustees are compensated
by a percentage of funds they administer under the terms in the
repayment plan. Experts say this is usually about 10 percent.
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