The Costs Of Filing For Bankruptcy

A recent review of bankruptcy statistics revealed some interesting patterns in filing trends.  Not only have trends followed changes in economic conditions, but legislation has played a key role as well. Since the change in bankruptcy  laws in 2005, some significant changes have been observed in filing patterns.

Bankruptcy Law Changes

In 2005 some major changes took place to the bankruptcy code. Passage of the Bankruptcy Abuse Prevention and Consumer Protection Act tightened the rules regarding qualification standards and the costs associated with filing for bankruptcy. In efforts to reduce unnecessary Chapter 7 filings and promote debtor liability, changes in the laws made it more difficult for certain individuals to qualify for bankruptcy as well as increase the filing fees. Debtors must now pass a means test, which compares their income to the median income level of the state,  in order to qualify for Chapter 7.

The most recent data suggest that it now costs 30 percent or more to file for, and receive a discharge under, a  Chapter 7 case. The average filing fee before the 2005 changes was $299, but now costs around $306. Filing fees for Chapter 13 cases are around $281, up from $274 in previous years. Studies show that legal fees have also increased over the years. The average cost for a bankruptcy attorney is around $2,000. However, debtors can still find many attorneys that offer payment plans, sliding scale services and free consultations.