The court filing fees in January 2025 for Chapter 13 are $313; however, there are mailing costs for sending the plan to the creditors, and we also charge for the postage which is about $25. The court filing fee for Chapter 7 is $338, so the filing fees for both chapters are similar.
The Court pays a flat fee often called a no-look fee which does not require an attorney to list his time hour by hour. Hourly rates run from 250 to 350 as an hourly fee and the cheap attorney works twice the hours making the total fees higher in his office. Often a case may have to be filed twice. In the Western District of Kentucky, this is a flat fee of $4100.
Lawyer fees in Indianapolis run up to 550 per hour. The flat fee is paid from the payments you make to the Chapter 13 Trustee. If you are paying back about $200 per month, you will make 60 payments of $200 or about $12,000 over paying 5 years into the plan. The attorney will be paid about $4100 and the Trustee will be paid .045 of the $12,000 which is about $540. The Creditors will then get what remains which is a little over $7,000.
Your plan can pay just 1% back to unsecured debts. I have even seen a 0% plan that paid nothing to unsecured debts.
Why would I want to pay creditors in Chapter 13
Filing a Chapter 13 has benefits you will not get in a Chapter 7. Understand the filing bankruptcy cost when deciding between Chapter 13 and Chapter 7. The expenses vary significantly.
- You may be able to strip a second mortgage in Chapter 13 that you couldn’t in Chapter 7.
- Only Chapter 13 can protect your cosigner.
- Your assets are never at risk in a Chapter 13 you can always dismiss it if you don’t like it. You can’t dismiss a 7 unless the trustee agrees.
- Only a Chapter 13 can cure a foreclosure filing a Chapter 7 only temporarily stalls it.
- If you can’t afford the Chapter 7 attorney fees upfront a small 175-a-month payment into a Chapter 13 can often allow you to pay the attorney over time.
- During Chapter 13 your debt such as medical bills may be ongoing or increasing. You continue to rack up thousands in medical debt and later convert to a Chapter 7 later and wipe out even more debt.
- If your income is too high or if you have filed a Chapter 7 within the last 8 years you may not be able to file as a Chapter 7. There are time limits as to how often you can file from one date of filing to the next.
Understanding Chapter 13 Bankruptcy Costs
Almost all Chapter 13 plans in our district are for 5 years. The attorney fees and filing fees are pretty much set in stone when you file bankruptcy filings in a Western or Eastern District of Kentucky. Almost all of the attorneys will be paid by the Court the same standard fee. Additionally, court filing fees are part of the overall costs involved in filing for Chapter 13 bankruptcy, contributing to the financial implications of the process. For the very poorest the filing fees can be waived. Ignore the hourly rate, you are normally paying a flat fee.
Since you can get the best attorney in town for the same cost as the kid who just graduated law school this can be a bargain for you. There is no need to shop around. They all cost the same. Just pick the best one. Don’t worry about his politics or items that are not important. Pick the most skilled attorney whether you are in the Eastern or Western District of Kentucky. Shop for cheap attorney fees in Chapter 7 not in Chapter 13. You can’t save money with less lawyer when the cost to file bankruptcy is the same.
The worth of a Chapter 13 Lawyer in Louisville, Ky
A three-year Chapter 13 pays less to the attorney than a five-year Chapter 13. Because the five-year plan is longer, your plan payments will be lower and during this time the creditor is not allowed late fees and some interest is waived. A car loan interest will often be reduced to 1% over the prime interest rate. So a truck loan at 24% can be reduced to about 9% or less and paid off over 5 years or at least paid up to date.
A quality lawyer will take advantage of all the discounts that this post does not have time to list. A cheap inexperienced lawyer will cost you dearly in what he does not know. An experienced bankruptcy lawyer will significantly enhance your chances of a successful outcome, especially in complex cases like Chapter 13 filings. He probably will not have a good relationship with the trustee and the secured debts that need his attention. Attorney fees are paid by the court and all the attorneys get the same fee. So pick the best attorney he costs the same as the worst. However, there are two attorney costs you do have to worry about.
Trust Accounts and Attorney fees.
You may have filed one or more prior bankruptcy cases. You promised in those cases to pay on time. This time when you file you can expect creditors like your mortgage and car loan to object that you have no intent to pay and your case should be tossed out. Most attorneys will request money to be paid into their trust account. If your Chapter 13 payments are 500 a month three months of plan payments will be 1500 dollars. Having this money ready to be paid to the trustee at the start of the case makes it more likely that your case will be approved by the trustee and confirmed by the judge.
In bankruptcy court, proving that you are working to make the payment plan work means a lot. Money talks and people who have excuses walk somewhere but it isn’t back home. The fact that you haven’t made a house payment for a year and that you spent that money and you aren’t making payments at the start of the case says a lot to the judge and trustee.
Being a Problem Client
To the law firm handling your case, excuses for not having the money to be paid in trust means that you are a very high-risk client who will probably never pay and they are doing the work without any chance of eventually getting paid. That is why they will often turn down clients who can’t pay money into Trust, as the bankruptcy law firm handling your case needs assurance of payment.
If the client files the case just to stop a sale and fails to show up for the 34 meeting then the Law firm will usually keep the trust funds to pay for the work they did. They often have 8-10 hours into a case at least at 250 per hour. That means they lose 2,500 dollars to people who do not make the payments and fail to show.
Attorney Fees for Chapter 13 Bankruptcy
Attorney fees for Chapter 13 bankruptcy can vary depending on the complexity of the case, the location, and the experience of the attorney. On average, attorney fees for Chapter 13 bankruptcy can range from $3,000 to $5,000. However, some attorneys may charge more or less depending on the specifics of the case.
It’s essential to note that attorney fees for Chapter 13 bankruptcy are typically paid through the bankruptcy plan, which means that the debtor will make monthly payments to the trustee, who will then distribute the funds to the creditors and the attorney. This can make it more manageable for debtors to pay their attorney fees over time.
When hiring an attorney for Chapter 13 bankruptcy, it’s crucial to discuss their fees upfront and understand how they will be paid. Some attorneys may charge a flat fee, while others may charge an hourly rate. It’s also important to ask about any additional costs or expenses that may be associated with the case.
Chapter 13 Plan Payments
The more you repay the less your judge, trustee, and court reviews your plan. When you file bankruptcy, the more you repay, the less your judge, trustee, and court review your plan. Very few creditors, judges, or trustees will object to a debtor who will repay 100% of their debt. At 100% you dont have to turn in an annual budget or lose your tax refund in the Western District of Kentucky. At 70% your plan is presumed to be filed in good faith. Two of my three judges will presume the plan was filed in goof faith at 50%.
The amount that you have to pay towards your debts is based on your income, non exempt equity in assets, and the debts you have to catch up during a plan. Those priority debts are normally your taxes that are less than 3 years old.
If your net income after paying for necessities is low the payments are low. But remember that secured and priority debts must be caught up and you have to repay any non exempt equity.
One common strategy is to file a Chapter 7 first then there are no debts to repay in your 13 and you may have a 100% plan that pays all the unsecured debts in full because there are no unsecured debts.
Filing Fees and Court Costs
When filing for Chapter 13 bankruptcy, you will need to pay court filing fees of $313 to the bankruptcy court. Bankruptcy attorneys can help you understand these costs and ensure that all necessary documents are filed correctly. This fee is required when you submit your bankruptcy petition. In addition to the court filing fees, there may be other court costs associated with your bankruptcy filing, such as the expenses for printing and mailing necessary documents.
Credit Counseling and Education Courses
As part of the Chapter 13 bankruptcy process, individuals are required to complete a credit counseling course before filing and a debtor education course after filing. These courses are designed to help your financial situation and develop a plan to manage your debt effectively, which will be reflected in your credit report. The cost of these credit counseling courses can range from $10 to $50, depending on the provider. Not completing the credit counseling course pre-filing means automatic dismissal of your case. Not completing the debtor education means you don’t get the discharge which is the final order in bankruptcy that makes your debts uncollectible.
Creating a Debt Repayment Plan
A crucial component of filing bankruptcy, specifically Chapter 13 bankruptcy, is the creation of a Chapter 13 repayment plan. This plan outlines how you will pay off your debts over a period of three to five years. The plan must be approved by the bankruptcy court and it involves making regular payments to a bankruptcy trustee, who will then distribute the funds to your creditors. Your payments to your mortgage, car, and trustee start the month you file.
The goal is to create a manageable repayment schedule that allows you to pay off debt for pennies so it is affordable. Often the cheap bankruptcy lawyer won’t get the low payments. He often doesn’t have the experience and knowledge.
In other cases, you may be placed into Chapter 13 because he earns 4100 as an attorney fee in Chapter 13 and only 1400 or 1600 in Chapter 7. In Chapter 13, you will pay back 12,000; in Chapter 7, 90% of filers pay back zero (0) and you are done in 4 months. If a Chapter 7 will do the job . . . don’t file Chapter 13.
Types of Debt You Must Repay Under Chapter 13
Some debts have to be repaid this includes priority debts such as taxes and child support. Secured debts like home and car loans have to be caught up. But unsecured debts such as credit card debt and medical debt can get 50% 25% 10% or even 0% is possible.
The plan payments must cover administrative costs, which are filing fees, court filing fees, trustee costs, and attorney fees associated with bankruptcy filings.
Chapter 13 Payment Schedule
A Chapter 13 payment schedule is a crucial component of the bankruptcy process. It outlines how you will repay your debts over three to five years, based on your disposable income. This income is calculated by subtracting necessary expenses from your total income. The bankruptcy court must approve the payment schedule, and the bankruptcy trustee ensures that payments are made according to the plan.
The payment schedule typically includes the following:
- Priority debts: These include taxes and child support, which must be paid in full.
- Secured debts: Home and car loans fall into this category and must also be repaid in full.
- Unsecured debts: Credit card debt and medical bills may be discharged or repaid in part.
- Administrative costs: These cover filing fees, trustee fees, and attorney fees.
Working with an experienced bankruptcy attorney is essential to create a realistic payment schedule that meets your financial needs and ensures compliance with the bankruptcy court’s requirements. This professional guidance can help you navigate the complexities of Chapter 13 and set you on a path to financial recovery.
Minimizing Bankruptcy Costs and Effects
While bankruptcy can provide a fresh start, it’s essential to minimize the costs and effects of the process. Here are some tips to consider:
- Seek Professional Advice: An experienced bankruptcy attorney can ensure that the process is handled correctly and efficiently, potentially saving you money in the long run.
- Consider Filing Without an Attorney: While this can reduce costs, it can also lead to mistakes and complications. Weigh the risks carefully.
- Look for Pro Bono Services: Some law firms offer free consultations or pro bono services, which can significantly reduce your expenses.
- Rebuild Credit Quickly: After your bankruptcy is discharged, take steps to rebuild your credit. This can help you recover more quickly and improve your financial stability.
- Explore Alternatives: Before deciding on bankruptcy, consider other options like debt consolidation or credit counseling. These alternatives can be less damaging and more cost-effective.
By taking these steps, you can minimize the costs and effects of bankruptcy and achieve a faster recovery.
Alternatives to Bankruptcy
While bankruptcy can provide a fresh start, it’s not the only option for individuals struggling with debt. Here are some alternatives to consider:
- Debt Consolidation: This involves combining multiple debts into a single loan with a lower interest rate and lower monthly payments.
- Credit Counseling: Working with credit counseling agencies can help you create a plan to pay off debts and improve your credit score.
- Debt Management Plans: These plans, often developed with the help of a credit counselor, outline a strategy to pay off debts over time.
- Debt Settlement: This involves negotiating with creditors to reduce the amount owed, potentially providing significant relief.
These alternatives may not provide the same level of debt relief as bankruptcy, but they can be a more cost-effective and less damaging option for individuals who are struggling with debt.
Finding a Reliable Bankruptcy Attorney
Finding a reliable bankruptcy attorney can be a daunting task, but there are several steps you can take to ensure you find the right one for your case. Here are some tips to consider:
- Experience: Look for an attorney who has experience handling bankruptcy cases, particularly in your area. A local attorney will be familiar with the bankruptcy court and the judges, which can be beneficial for your case.
- Reputation: Research the attorney’s reputation online and ask for referrals from friends, family, or other attorneys. Check for reviews and ratings on websites like Avvo or Justia.
- Communication: Choose an attorney who is responsive to your calls and emails. You want an attorney who will keep you informed throughout the process and answer any questions you may have.
- Fees: Discuss the attorney’s fees upfront and understand how they will be paid. Make sure you are comfortable with the fee structure and that it fits within your budget.
- Certifications: Look for an attorney who is certified by the American Board of Certification (ABC) or the National Association of Consumer Bankruptcy Attorneys (NACBA). These certifications indicate that the attorney has specialized knowledge and expertise in bankruptcy law.
By following these tips, you can find a reliable bankruptcy attorney who will guide you through the process and help you achieve the best possible outcome for your case.
Getting a Fee Waiver
In some cases, individuals may be eligible for a fee waiver, which can reduce or eliminate the costs associated with filing for bankruptcy. To qualify for a fee waiver, you must meet certain income and expense requirements, which vary by state.
To apply for a fee waiver, you need to submit a petition to the bankruptcy court, along with documentation of your income and expenses. The court will review your petition and decide based on your financial situation.
Working with an experienced bankruptcy attorney can help you determine your eligibility for a fee waiver and ensure that your application is handled correctly. This professional guidance can make the process smoother and increase your chances of obtaining a waiver.
When Do You Need A Chapter 13 Bankruptcy Attorney?
Filing for bankruptcy can be an emotional event. However, it should be a financial decision where you choose to take care of your family and spouse which are more important than your creditors. If you and family are losing your home car not paying for food and medical necessities to pay creditors seriously consider bankruptcy. Working with a reputable bankruptcy law firm can ensure that your case is handled efficiently and effectively. Taxes and student loans can garnish your wages bank accounts and even social security without warning or a hearing. If you have joint debts with someone else, they may also be able to garnish your wages or take property out of their name without your consent.
Bankruptcy is just a financial tool that will eliminate debt and increase your net worth and credit score almost immediately in Chapter 7 and over time with Chapter 13. Make an appointment, we can explain the bankruptcy cost and benefits of Chapter 13 bankruptcy.
Conclusion
Filing for bankruptcy can be a complex and costly process. But it provides a fresh start for individuals struggling with debt. Understand the costs and work you have to do in bankruptcy. Remember, bankruptcy is a financial tool designed to help you increase wealth and improve your credit report. Your delinquent accounts will be reported as account closed and not as delinquent.
