What is the cost of Bankruptcy?
There are three costs in obtaining bankruptcy relief.
First is the court cost, or filing fee and the counseling fee.
The second is the legal fee.
The third is an administrative fee imposed in Chapter 13 cases by the Chapter 13 Trustee.
Court costs and administrative fees are set by law. Legal fees are set by the attorney you select to represent you but are generally regulated by the Court as to their reasonableness. In many cases, the Court will limit the amount of an initial payment to the attorney and the Court may limit the total amount that can be paid to the attorney. Any fee above that amount can be paid only after application to and approval by the Court and only if the higher fee can be justified and is reasonable.
In Chapter 7 the attorney usually requires his fees to be fully paid prior to filing your bankruptcy. The reason for this is that any balance owed the attorney when the bankruptcy is filed is likely to be discharged like any other debt, which means you are not obligated to pay the attorney the balance of the legal fee.
In Chapter 13 the procedure varies across the country, but in this area you generally pay the filing fee and a small part of the legal fee prior to filing. The balance of the legal fee and the administrative costs are paid out of your Chapter 13 payments.