Chapter 7 liquidation is a form of bankruptcy available to individuals and business entities. This procedure erases most of an individual's or business' debts and sells personal or business property to compensate creditors. Those who file for Chapter 7 bankruptcy are required to pay credit counseling fees in addition to court costs and optional lawyers' fees.
Credit Counseling Costs
Although business entities are exempt from this rule, individuals must receive credit counseling from a nonprofit agency no more than 180 days before filing for Chapter 7 bankruptcy protection, say the United States Courts. Even though authorized credit counselors are "nonprofit," they still must charge for their services. As of December 2010, these fees vary widely.
Administrative and Filing Fees
The United States Bankruptcy Court also assesses several nonrefundable fees and surcharges to individuals and business entities seeking to file for Chapter 7 bankruptcy. As of December 2010, this includes a $245 case filing fee, a $39 administrative surcharge and a $15 bankruptcy trustee surcharge. Filers must pay these fees when they file their bankruptcy petitions.
Lawyer Fees
Although the United States Courts do not specifically require individuals or businesses to hire lawyers to handle bankruptcy cases, many filers choose to get professional legal help. As of December 2010, the average cost of a bankruptcy attorney is $1,000 to $2,000, according to Bankruptcy Action, a consumer debt information service. Typically, individuals and businesses pay these attorney fees after their bankruptcy cases conclude.
Total Cost
According to Bankruptcy Action, as of December 2010 the approximate total cost of a Chapter 7 filing is between $1,300 and $2,300, including court fees and attorney costs. This does not include the credit counseling fees described in Section 1, which vary greatly. Additionally, the courts may require businesses filing for Chapter 7 protection to convert to Chapter 11 reorganization bankruptcy in certain cases. The cost for such conversion is $755 as of December 2010.
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