The cost is always less that the cost of NOT doing a bankruptcy. If the cost is more, we advise you not to file for bankruptcy relief.
An obvious cost of a bankruptcy petition is the attorney's fee. I have found that there is very little difference in attorney's fees. You can't save more than a couple hundred dollars between lawyers' fees for the same type of case. Some people like cheap doctors, and some people like cheap food. Some people pick attorneys by a $100 difference in price, not realizing that one deal your attorney makes can save or cost you thousands. So, the cheapest lawyer in town is not necessarily the best. In other words, go for experience, not price, because there is not much difference in fees for consumer bankruptcies, but there is a big difference in the quality of the advice and service.
For instance, let's say that 5 years later, a bill collector calls and says you left him off your petition, and he wants to be paid. Will you be able to call your attorney who did the Chapter 7, for advice, or will the telephone be disconnected?
At the Law Offices of Peter Francis Geraci Chapter 7 cases cost between $500 and $2500. Fees can be paid in installments. No attorney will file a Chapter 7 without being paid first. Anyone can afford at least 10 payments of $50 or $75 or $150 if you are not paying other debt.
Chapter 13 fees vary by area, but over 36 months are only $50-60 per month. That is ridiculously cheap. Lawyers that claim to be “cheap” can often end up costing you more! Beware of “cheap fee quotes on the phone”
The more debt you have, the better deal you get, because there is almost the same amount of work involved in a case with $10,000 in credit, as in a case with $50,000 in credit. In most Chapter 13 cases, you are saving a lot of money on interest, so the cost is less than paying the creditors at their contract rate of interest. However, Chapter 7 cases are usually cheaper than Chapter 13 cases in terms of total cost.
Some people focus on the attorney's fee in choosing an attorney. These are the same people that buy cheap toilet paper, and the result can be about the same. You could be left with something on your hands that you did not expect. My office gets calls from about a hundred people a year who have had Chapter 13 or Chapter 7 cases goofed up because they tried to save $100 on attorney fees. I don't have time to talk to them.
We have to worry about our own clients. Trying to save that $100 can cost you 10 times that or more. So, one cost of a bankruptcy might be getting bad advice or bad representation by your attorney. The attorney's fee doesn't matter, since you can't save much from one attorney to another.
Another cost of a bankruptcy is the fee in a Chapter 13 that the Chapter 13 trustee charges to take your payment and distribute it to creditors. This is 7% to 9% of the Chapter 13 payment. Out of a $100 per month payment, $7 to $9.00 would go to the trustee who handles the money, and the rest to the creditors.