Cost to File Bankruptcy in Washington
If you are at a financial breaking point, you may be considering filing for bankruptcy. For individuals, a Chapter 13 bankruptcy or a Chapter 7 bankruptcy could be the key to getting a fresh start. But if you can barely afford to make ends meet, how can you pay for a bankruptcy?
The good news is that filing for bankruptcy is relatively affordable. In Washington State, you could pay as little as $1,195 in legal fees for a Chapter 7 bankruptcy. In addition to attorneys’ fees, you will also be normally required to pay a filing fee to the court.
While filing for bankruptcy will cost you some money, it is often the best way to get out of debt. In the long run, the fees that you pay for a personal bankruptcy are well worth it. If you are considering filing for bankruptcy in Washington, the Law Office of Richard D. Granvold is here to help.
How Much Does It Cost to File for Bankruptcy in Washington?
The cost of a filing for bankruptcy in Washington State depends on what type of bankruptcy you are filing, the complexity of your case, and other factors, such as whether you are hiring an attorney. While it is possible to file for bankruptcy without a lawyer, the U.S. Bankruptcy Court generally advises that individuals should seek the advice of a qualified bankruptcy attorney given the complex financial and legal issues involved in bankruptcy cases. Without such advice, irreversible damaging results can occur as once a case is filed it is often too late to fix agonizing painful results.
There are three basic categories of expenses in the bankruptcy process:
- Filing fees, which are what you pay the court in order to file a bankruptcy petition;
- Attorneys’ fees, which are paid to your bankruptcy lawyer for the work that they do; and
- Miscellaneous expenses, such as the cost of pulling a credit report and taking a credit counseling class.
For Chapter 7 bankruptcies, the court filing fee is $338. This type of bankruptcy – known as a liquidation bankruptcy – is typically simpler than a Chapter 13. The filing fee for a Chapter 13 is $313.
Many bankruptcy attorneys charge a flat fee for a Chapter 7 bankruptcy but the contracts will include charges for work not normally required in most cases. On average, the initial fee for a Chapter 7 in Washington State is $1,500. Depending on your specific situation and the lawyer that you choose, this fee may be higher or lower. Some bankruptcy attorneys may offer an hourly rate for additional services above and beyond the basic filing.
Chapter 13 bankruptcies are more complex than Chapter 7. Unlike Chapter 7, where your credit card debt and other debts can be discharged, a Chapter 13 requires you to set up a payment plan to pay off all or part of your debt over a period of 3 to 5 years. In addition to a bankruptcy petition, you will need to file a schedule of assets and liabilities, a schedule of current income and expenditures, a schedule of executory contracts and unexpired leases, a statement of financial affairs, and often the very complex “means test”.
Chapter 13 bankruptcies require more work, but they allow you to protect much of your personal property. For this reason, attorneys’ fees are typically higher for this type of bankruptcy as substantial more services are required.
In Washington State, there is a presumptive or “no look” fee of $4,000 in Chapter 13 cases. This means that your attorney can seek up to $4,000 in fees without approval from the bankruptcy judge. If your legal fees are higher than this no look threshold, then the bankruptcy court will have to approve it.
For both Chapter 7 and Chapter 13 cases, you will have to pay for debtor education through a nonprofit credit counseling organization. This typically costs $30 or more with most attorneys. (The Law Offices of Richard D. Granvold know how to pay merely $9.76 for a single person and $14.95 for a couple). In addition, you may need to pay for your attorney to pull a credit report for each party that is filing for bankruptcy but you can obtain all 3 credit reports yearly for free.
Are There Other Payment Options?
Bankruptcy attorneys understand that if you are in a position where you are considering filing for bankruptcy, you don’t have much in the way of disposable income. For this reason, most lawyers will work out a payment plan rather than requesting that you pay their full fee up front. The Law Office of Richard D. Granvold will let you pay $695 of the $1,195 fee over a 5 month period before filing, and the balance at $100 a month after filing also.
For example, if your bankruptcy attorney charges $4,000 for a Chapter 13, they may ask you to pay $1,000 to start the case, and then allow you to pay in installments in the Chapter 13 Plan until you have paid off the debt.
The least expensive attorney is not always the best choice. When you file for bankruptcy, you want it to be done right. (If you needed eye surgery would you go to the cheapest eye surgeon you could find?) Most bankruptcy attorneys offer free initial consultations, where you can get a better idea of your options and ask questions about fees and payment plans.
For Chapter 7 bankruptcies, there may be some alternatives to paying the entire filing fee at once. You can ask the court to pay the filing fee in installments. However, you must pay the entire $338 fee within 120 days of filing a bankruptcy petition, and in no more than 4 installments.
The Chapter 7 filing fee may also be waived if paying it would present an undue hardship. To qualify, you must not be able to pay the filing fee in installments and your monthly income must be below 150% of the federal poverty line. You will need to fill out an application for this waiver, which will ask you to list your family’s average monthly income, average monthly expenses, your personal property, and explain why you cannot pay the fee in installments.
Is It Worth It to File for Bankruptcy?
If you are at the point where you are thinking about filing for bankruptcy, then the costs are typically worth it. Being in financial distress can take an incredible toll on a person and their family. Depending on your financial situation, bankruptcy may be the best way to get a fresh start in life.
Filing for bankruptcy can put an immediate stop to endless calls and letters from collection agencies. It will also stop wage garnishments and foreclosures. In short, it can give you the space that you need to figure out a plan for getting out of debt, whether that involves a Chapter 7 bankruptcy discharge or a payment plan through a Chapter 13 bankruptcy.
Financially, the roughly $1,600 to $4,000 that you will pay in filing fees, legal fees, and other expenses is often less than what you will pay in late fees and interest on both secured debt (like a mortgage) and unsecured debt (such as personal loans or medical bills). Over time, the interest and late fees can really add up. You might even be paying more in interests and fees in just a few months than what you would pay to file for bankruptcy.
Bankruptcy costs can seem overwhelming, particularly if you are already having difficulty paying your bills. Yet if you are in a place where you can’t make the minimum payment on your student loans or credit card debt, then filing for bankruptcy might be the best option for you. It is often more affordable than you may expect, with payment plans often available.
Do I Have to Go to Credit Counseling Before Filing for Bankruptcy?
Yes. Under the U.S. Bankruptcy Code, all individuals must go to pre-bankruptcy credit counseling classes and pre-discharge debtor education classes. A certificate of completion for (1) the credit counseling must be taken before your case is filed, and (2) the debtor education must be filed with the bankruptcy court before your debts can be discharged.
This requirement is designed to ensure that you understand what bankruptcy means – and that you will hopefully not need to file bankruptcy again. A skilled bankruptcy attorney in Federal Way, WA can help you determine if you are eligible to file personal bankruptcy and work with you to successfully file a bankruptcy petition. No matter where you live in Western Washington he can help as all cases must be filed in either the Seattle or Tacoma Federal Bankruptcy Court.
Will I Have to Attend a Court Hearing If I File for Bankruptcy?
In all bankruptcy cases, you will need to attend a “meeting of creditors”. However, because of Covid the meeting in fact will be on the telephone and not at the actual court location. At that meeting you will answer the bankruptcy trustee’s questions, and any creditor who chooses to attend which creditors rarely do. This is typically a short meeting where you will be asked about your bankruptcy petition and financial situation. In either chapter, unless some rare complication arises, you will probably never appear in court before a bankruptcy judge.
The bankruptcy process can be complicated, which is why your best option is to seek legal advice before deciding to file. In Federal Way, Washington, the Law Office of Richard D. Granvold can help you understand your legal rights and options for pursuing a Chapter 7 or Chapter 13 bankruptcy.
Will Bankruptcy Affect My Credit Score?
There is a common belief that bankruptcy is the worst thing that you can do to your credit score. Yet if you are at the point where you need to file for bankruptcy, your credit is probably already pretty bad due to late payments, missed payments, and a high debt-to-income ratio. In this situation, filing for bankruptcy may actually improve your credit score over time.
While each situation is unique and there are no guarantees, filing for bankruptcy might be a good way to get yourself back on track financially. Contact the Law Office of Richard D. Granvold for a no-cost, no-obligation consultation about your options for filing for bankruptcy in Washington State.
Considering Bankruptcy? We Can Help.
If you have found yourself in a difficult financial situation, bankruptcy may be the best way to get out of debt and move forward with your life. The cost of filing for bankruptcy is often less than what you would think. You may even qualify for a waiver of the court filing fee or an installment plan.
At the Law Office of Richard D. Granvold, we understand how challenging it can be to get yourself out of debt. If you are considering filing for bankruptcy, we can help you make a decision that works best for you and your family. To learn more or to schedule a free consultation with a Federal Way, WA bankruptcy attorney, call our office at 253-289-3522 or fill out our online contact form.