Chapter 7 Bankruptcy:

How Much Does It Cost?

AVERAGE ATTORNEYS' FEES

$1,000 -
$1,750

Attorneys' fees for Chapter 7 typically range from $1,000 to $1,750, with an average of $1,450. Other costs range from $50 to $450.

  •  Attorneys' fees for Chapter 7 typically range from $1,000 to $1,750, with an average of $1,450. Other costs range from $50 to $450.

A big concern of people considering filing bankruptcy is how much it will cost. To get a better idea of how much Chapter 7 filers have to pay for their bankruptcy case, we recently surveyed our readers throughout the United States to find out about their experiences. Here’s what we learned.

To start off, we found out how much you can expect to pay for a bankruptcy attorney—valuable information when you’re shopping for legal help. In addition to average attorneys' fees, below you’ll find helpful information such as the factors lawyers consider when deciding how much to charge you and other costs you can expect to pay along the way.

How Much Does a Bankruptcy Attorney Charge for Chapter 7?

Our survey results tell us that the average cost to file for Chapter 7 bankruptcy is $1,450. Many readers (40%) paid between $1,000 and $1,500, though there were some who paid as little as $500 and as much as $5,000.

This wide range is not as surprising as you might think. Each person’s unique financial situation affects the overall cost of the bankruptcy. The complexity of your case, as well as the type of attorney you’d feel more comfortable with, will likely determine the amount you’ll pay. (Most lawyers charge a flat fee that will cover the preparation of your bankruptcy petition and attendance at your court appearance. A small minority of attorneys charge an hourly fee, but it’s rarely in a client’s interests to agree to such a payment structure.)

When Bankruptcy Attorneys Charge Higher Fees

Many attorneys take into account the difficulty of your case when quoting a flat fee because the attorney will want compensation for the amount of work he or she has to do on your behalf. Before quoting you a fee, your attorney will ask you questions geared towards spotting relevant issues in your case. Here are some issues that might increase the amount of time needed to prepare your matter.

Higher Income and Assets Can Mean Higher Attorneys' Fees

Your attorney may charge you a higher fee if any of the following statements are true about your income or property you own (especially any of the last three).

  • You make more than your state’s median income for your household’s size. (To give you a sense of this figure, the median annual income for a family of four in California is about $82,000, and in Florida, it's about $67,000.)
  • You have multiple sources of income.
  • You have a retirement account or a pension plan.
  • You’re filing a business bankruptcy (or a personal bankruptcy but you own a business).
  • Your case is an "asset case" (funds will be available to distribute to your creditors).
  • You have equity in your house, car, or other assets (the property is worth more than what you owe).
  • You want to keep more property than you can exempt under your state’s exemption statutes.

In our survey, readers in households with more than $6,000 in income per month ($72,000 per year) reported paying attorneys' fees that were $300 more than the average.

More Financial Hot Water Can Mean Higher Attorneys' Fees

If you have any of the following issues that could complicate your case (especially any of the last four), your attorney may charge you a higher fee.

  • You have a large number of creditors.
  • You’ve filed for bankruptcy within the last eight years.
  • You want to stop an eviction, foreclosure, bank levy, or wage garnishment.
  • You have liens filed against your property.
  • You are involved in litigation in state or federal court.
  • You anticipate being accused of engaging in fraudulent activity (including making credit card purchases without intending to pay them back).
  • You have nondischargeable debts (debts that don’t go away in bankruptcy), such as past-due taxes.

Interestingly, according to our survey, having more debt or more types of debts typically didn't mean higher attorneys' fees.

Personal Issues Can Affect Attorneys' Fees

The following issues could complicate things just enough for a bankruptcy lawyer to charge you a higher fee.

  • You’re separated but not yet divorced.
  • You have an obligation to pay spousal support, child support, or equalizing payments (based on the division of property in your divorce).
  • You have a rocky relationship with an ex-spouse or ex-business partner.

At the end of the day, the more of these problems that you have, the more likely an attorney will ask you for more money before agreeing to represent you. In complicated cases, it is always a good idea to retain a knowledgeable attorney who is well-versed in the procedures and practices of your local court.

When Bankruptcy Attorneys Offer Reduced Fees

Some bankruptcy cases are very simple to prepare, especially for those whose income is low enough to qualify for a waiver of the bankruptcy filing fee. (Those who make less than 150% of the federal poverty guidelines can get the filing fee waived.) Such cases usually involve a limited amount of property and few creditors. The types of people who tend to have bankruptcies that require minimal work include:

  • senior citizens on a fixed income
  • individuals receiving disability payments
  • unemployed people with low assets, and
  • some students.

If your average monthly income falls within 150% of the federal poverty guidelines for your household size, you might be able to find an attorney who will handle your case at a reduced rate, assuming you aren't comfortable preparing your bankruptcy paperwork or you don’t want to attend the 341 meeting of creditors on your own. In our survey, readers who were unemployed when they filed bankruptcy reported paying attorneys' fees that were about $250 less than the average.

How the Type of Bankruptcy Attorney Affects the Fee

Some people want to work in close collaboration with their bankruptcy lawyer while others take the “Just get it done” approach and desire 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. The benefit of using this type of firm is that you might pay attorneys' fees of $1,000 to $1,200 for a straightforward Chapter 7 case.

By contrast, an attorney with a small caseload might have more time to handle new cases, and even better, might be willing to undercut the price of bankruptcy firms (although you may want to research why that might be, because you don’t want to hire a hard-to-get-along-with attorney or one who does shoddy work). Such attorneys could charge as little as $500.

Other lawyers with smaller practices, however, might take a hands-on approach and be there to consult with you throughout the entire process. When you interview lawyers, this type of attorney will have a more caring approach and will take more time reviewing your case. You can expect to pay more for that service: $1,500 to $2,000 for a standard consumer bankruptcy.

To help you meet your particular needs, here are some questions you can ask during your consultation:

  • Who will complete my paperwork?
  • Who will answer my questions if I call the office?
  • Will you or a junior attorney go with me to the 341 meeting of creditors?

Additional Fees and Costs When Filing Bankruptcy

Here are a few other expenses you’ll likely have to pay for when you file Chapter 7.

Filing fees. In addition to the fees you pay your attorney, you’ll be required to pay the bankruptcy court’s filing fee ($335 in 2016), unless you qualify for a waiver. To be eligible for a waiver of the filing fee, you must make no more than 150% of the national poverty guidelines. (For instance, a family of four with annual income of up to $36,000 qualifies for a filing fee waiver.)

Bankruptcy counseling course fees. Everyone filing for Chapter 7 bankruptcy must take two bankruptcy counseling courses: one before filing and the other afterward. These courses should cost about $60 or less. Discounted courses are available for low-income people.

Litigation fees and costs. If your bankruptcy case ends up in litigation, you'll owe your attorney more money. According to our survey, the vast majority (95%) of Chapter 7 bankruptcy cases moved through the process without incident. However, not all cases do. In a small percentage of cases, a creditor will object to the bankruptcy court's discharging a debt on the grounds of fraud (including making credit card purchases or taking cash advances without intending to pay them back).

If a creditor files an “adversary proceeding” for fraud (which is unlikely), you’ll need to pay your bankruptcy attorney additional fees to oppose the adversary proceeding on your behalf. Your regular bankruptcy fee does not include representing you in this type of litigation.

About This Report

The data referenced above is from Martindale-Nolo Research's 2016 bankruptcy study, which analyzed survey responses from readers who had filed bankruptcy and had researched hiring a lawyer. The names of any quoted readers have been changed to protect their privacy.

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