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I have a house with equity and a small cottage. I would like to file Bankruptcy as I have high debts. How much is a Ch 13?

Sanford, ME |

I would like to keep both properties so I might have to file a Ch 13 as far as I understand. How much do these usually run? Is there a place I can go to get the average cost for everything associated with the case, exclusive of litigation, or other unusual happenings? Any references or ideas as to the average cost would be appreciated. This is an important factor for me in my decision. Thanks for all of your contributions. I know I appreciate them.

Attorney Answers 5

  1. There is no set answer to your question - you'll have to call around to local bankruptcy attorneys and see what they are charging for a Chap. 13 - it will vary, but it shouldn't be widely different between attorneys.

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  2. In many jurisdictions, attorneys charge the same thing for Chapter 13 because the local courts impose a "no-look" fee ceiling wherein the supposition is that that fee cap is what most Chapter 13 cases are going to generate in fees earned by the attorney. The fee varies from jurisdiction to the next and depending on the attorney you hire, the bulk of the fee may be paid over time through the Chapter 13 payment plan. In the Southern District of Indiana, for example, most attorneys charge $4,000 for Chapter 13. The court charges a filing fee of $281 and you have too the costs of mandatory credit counseling.

    Advice on this forum is for informational purposes only and should never be mistaken as a substitute for legal advice. If you are in need of legal advice, you should consult local legal counsel.

  3. Here is how it works in a Chapter 13. You will pay a relatively small down payment. Then you will pay a set amount to the Bankruptcy Trustee every month based on what your budget shows you can afford. Out of that money, the Trustee will pay the balance of your attorney fees, any taxes you owe, any mortgage arrearages you may have, and other mandatory debt that your plan requires. Anything over and above that amount gets paid to your unsecured creditors, those debt collectors, credit cards, etc that probably drove you into bankruptcy.

    Because of a karma-like interpretation of bankruptcy law, the money paid for legal fees comes out of money that would otherwise have to be used to pay your unsecured creditors. So the more money you agree to pay your attorney, the less money goes into the pocket of the aggressive creditors that drove you into making the decision to file bankruptcy.

    So under these circumstances, why don't you reassess your decision to shop by price and instead shop by quality & required down payment. In many instances, a Chapter 13 attorney will be open to negotiating the down payment.

    Hope this perspective helps!

  4. I agree with my colleagues here. The fees will differ depending on the jurisdiction. Like others have stated, most attorneys will require a downpayment and the remaining attorney fees will be paid through your Chapter 13 plan payments over several months. Most attorneys in your jurisdiction will charge the same fees over all. What may differ is how much of a downpayment is required. In some jurisdictions such as the Northern District of California, attorney fees paid through the plan don't start to flow to the attorney until the plan has been approved (confirmed) by the court. If your bankruptcy is particularly difficult there may be objections to confirmation by the trustee which may or may not prolonged when the attorney will get his/her fees paid. With the equity you have in your house and a small cottage that, if owned outright with no liens, may be all equity, the attorney will have to set up a plan that takes this equity into consideration (exemptions, etc.). The more difficult the bankruptcy the more the downpayment may be.

    Good luck!
    Jeremy F. Peck, Esq.

    The response given is not intended to create, nor does it create an ongoing duty to respond to questions. The response does not form an attorney-client relationship, nor is it intended to be anything other than the educated opinion of the author. It should not be relied upon as legal advice. The response given is based upon the limited facts provided by the person asking the question. To the extent additional or different facts exist, the response might possibly change. Attorney is licensed to practice law only in the State of Illinois. Responses are answers to general legal questions and the receiver of such question should consult a local attorney for specific answers to questions.

  5. There is no set fee, but the courts will regulate "excessive fees" . In WDNY, the average fee is $1,500 to $2,500. The attractive part of a chapter 13 is that only part of the attorney fee has to be deposited. In my practice, I usually charge (depending on the complexity of the case) $300 plus the filing fee of $281. The balance of the attorney fee is paid by the chapter 13 plan from your plan payments. Chapter 13 is a great way to protect additional real property (with equity) or non-exempt personal property or pay delinquent taxes or get current with mortgage or car payments.

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