Bankruptcy Cost & Fees | How Much Does It Cost to File Bankruptcy?

Intro: Bankruptcy Cost and Fees | Filing Rates

Bankruptcy is becoming much less taboo in today’s society. It is no secret that many middle class Americans face financial hardship. In fact, nearly half of this cohort would be hard-pressed to come up with $400 in an emergency.

These struggles, often coupled with mounting levels of debt, lead many to consider filing for bankruptcy. The cost to file bankruptcy, however, can be a deterrent for those who are already struggling financially.

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While the decision whether to claim bankruptcy is one that should not be taken lightly and should be discussed with professionals, the pros and cons of filing for bankruptcy is beyond the scope of this article.

Instead, this article provides a detailed examination of the necessary costs of filing bankruptcy, complete with comparative tables.

If you or a loved one are wondering how much does it cost to file bankruptcy, keep reading.

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How Are Bankruptcy Filing Fees Determined?

Bankruptcy in America is governed by the Constitution of the United States under Article 1, Section 8, Clause 4. This means that Congress is authorized to enact laws uniformly across the country. Most recently, Congress exercised this authority in the codification of the Bankruptcy Reform Act of 1978, also referred to as the Bankruptcy Code.

Cases of bankruptcy are then filed in the United States Bankruptcy Court, which works from a Schedule of Bankruptcy Fees that applies nationwide. In turn, this will help you determine the cost of bankruptcy.

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How Much Does It Cost to File for Bankruptcy?

Seeking an answer to the question “how much does bankruptcy cost?” is understandable if you are considering or have decided to declare bankruptcy. After all, the decision overwhelmingly takes place when money is extremely tight, making the bankruptcy cost a legitimate concern.

While it may seem to add insult to injury, a bankruptcy filing fee is required in the United States. The fee covers the services that are provided by the clerks at bankruptcy courts. However, the question of how much does bankruptcy cost is not a simple one to answer.

Instead, it depends on a debtor’s specific financial situation. Some of the most common bankruptcy filing situations, as well as the corresponding bankruptcy costs, are outlined below.

Chapter 7 Bankruptcy Cost and Fees

Chapter 7 is referred to as the liquidation chapter. It is used by individuals, partnerships, or corporations who are in dire financial situations and have no chance of repairing it. In such cases, the estate of the debtor is liquidated according to the Bankruptcy Code.

This means that a trustee sells the debtor’s non-exempt property for cash. The cash is then distributed to the creditors who are owed by the debtor.

The bankruptcy filing fee for a Chapter 7 petition is $335. This includes a $245 filing fee, a $75 administrative fee, and a $15 trustee surcharge fee. The bankruptcy cost under Chapter 7 is low compared to other chapters.

Chapter 9 Bankruptcy Cost and Fees

Chapter 9 of the Bankruptcy Code is reserved for municipalities, including cities, towns, villages, counties, taxing districts, municipalities, and school districts. According to United States courts, the purpose of municipal bankruptcy under Chapter 9 is:

“to provide a financially distressed municipality protection from its creditors while it develops and negotiates a plan for adjusting its debts. Reorganization of the debts of a municipality is typically accomplished either by extending debt maturities, reducing the amount of principal or interest, or refinancing the debt by obtaining a new loan.”

Municipalities must pay $1,717 in bankruptcy filing fees, which includes a $1,167 filing fee and a $550 administrative fee.

Chapter 11 Bankruptcy Cost and Fees

Chapter 11, also referred to as the reorganization chapter, lets individuals, partnerships, and corporations reorganize instead of liquidating their assets. According to the United States Bankruptcy Court, District of Nevada:

“In filing a Chapter 11, the debtor presents a plan to creditors which, if accepted by the creditors and approved by the Court, will allow the debtor to reorganize personal, financial or business affairs and again become a financially productive individual or business.”

The bankruptcy fees for filing under Chapter 11 amount to $1,717, including a filing fee of $1,167 and an administrative fee of $550, making the cost of filing bankruptcy this way quite high for individuals.

Chapter 12 Bankruptcy Cost and Fees

If you are a family farmer or a family fisherman, you will file under Chapter 12, which is limited to these two cohorts. Instead of liquidation, Chapter 12 allows family fishermen and family farmers with regular annual income, but who find themselves in a situation of financial distress, to devise a plan to repay their debts to creditors in installments over a period of three to five years.

The plan must be approved by the Bankruptcy Court, after which time debtors are protected, and the payment plan begins.

Chapter 12 is included in the bankruptcy code because it recognizes the unique—and sometimes difficult—economic situations of family farmers and family fishermen. As such, it removes most of the difficulties that debtors in these professions would be faced with if they were forced to claim bankruptcy under Chapter 11 or Chapter 13. For example, United States Courts claims that “Chapter 12 is more streamlined, less complicated, and less expensive than Chapter 11, which is better suited to large corporate reorganizations.”

Additionally, due to the nature of their professions, family farmers and family fishermen typically face larger debts than the average wage earner, making Chapter 13 unsuitable for this cohort as well.

Family farmers and family fishermen can expect to pay a total of $275 in bankruptcy fees, including a $200 filing fee and a $75 administrative fee. The cost of bankruptcy is relatively reasonable under Chapter 12.

Chapter 13 Bankruptcy Cost and Fees

Individuals with regular income but who face large debt may file for bankruptcy under Chapter 13 of the Bankruptcy Code. Chapter 13 allows filers to repay their debts within a reasonable period of time. Therefore, a plan is devised by which debtors must agree to pay a decided percentage of all future income to creditors via the Bankruptcy Court. The Court will protect debtors following the approval of such plans.

So, how much does it cost to file bankruptcy under Chapter 13? The cost of bankruptcy of this type is $310. This amount covers a $235 filing fee and a $75 administrative fee.

Chapter 15 Bankruptcy Cost and Fees

When parties involved in a bankruptcy filing are from two (or more) different countries, the case is filed under Chapter 15. Like Chapter 11, the bankruptcy filing fees under Chapter 15 total $1,717. A $1,167 filing fee and a $550 administrative fee are covered by this total cost.

The above fees are summarized in table 1 for comparison.

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Average Bankruptcy Cost and Fees

Bankruptcy Type	Cost & Fees	Administrative Fees + Surcharge	Total Bankruptcy Cost
Chapter 7	$245	$90	$335
Chapter 9	$1,167	$550	$1,717
Chapter 11	$1,167	$550	$1,717
Chapter 12	$200	$75	$275
Chapter 13	$235	$75	$310
Chapter 15	$1,167	$550	$1,717