How much does it cost to file bankruptcy in Utah?

Although it may seem paradoxical, bankrupt debtors need to pay their attorney and the court in order to file bankruptcy. If you file under Chapter 7 (Liquidation), the attorney chooses what to charge for attorney's fees. Since Chapter 7 bankruptcies have a very short life span (usually a few months), the fees are usually paid up front. If you file under Chapter 13 (Reorganization), the court has a rule that defines what attorneys charge. The attorney usually asks for a portion of the fee up front, but the remainder will be paid to the attorney in periodic payments while you make payments into your Chapter 13 plan.

Chapter 7 costs and timing

There are three expected costs in a Chapter 7 bankruptcy: Your attorney fee (varies depending on the attorney, often they are in the range of $1,200 to $1,600), your court filing fee ($335 in Utah currently), and the fee for credit counseling (often in the range of $15 to $25 for the first class before filing, and there is a second class with a similar price that must be taken a few months after filing)

Ordinarily, clients are able to afford chapter 7 bankruptcy because they stop paying their unsecured creditors before filing, saving enough money to hire the attorney.

Chapter 13 costs and timing

In a Chapter 13 bankruptcy, you pay the same amount up front as a chapter 7, but additional fees are paid through the Chapter 13 Plan. The total fees for filing the Chapter 13 and representing you through the confirmation hearing are typically between $3,000 and $3,500.

Although the attorney's fees in a chapter 13 bankruptcy are higher than those in a chapter 7 bankruptcy, this is not strictly true from the debtor's standpoint, because of the way the chapter 13 plan works. In most cases, where some portion of the plan payments will go to creditors, the amount of the bankruptcy attorney's fee simply takes away from the total amount the creditors receive, so that in those cases, it is, from the debtor's standpoint, the creditors paying for that portion of the attorney's fee.

There are other factors that are important in evaluating whether chapter 13 or chapter 7 is the more economic choice. For example, the chapter 13 bankruptcy can accomplish things a chapter 7 cannot, such as cramdown and lien stripping. In many cases, where a debtor wishes to keep a piece of property, the chapter 13 bankruptcy saves thousands of dollars in interest that may make the chapter 13 bankruptcy, in the end, effectively less costly than a chapter 7 bankruptcy.

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