How Much Does Chapter 7 Cost? 6 Expenses From Filing Fee to Trustee Commission

A Chapter 7 case is priced in two currencies, and most people who file one count only the first. The first is money that leaves the debtor's own hands: a filing fee, two short courses, a lawyer. The second leaves the estate after the trustee has sold whatever could be sold, and it is often the larger sum, though nobody hands the debtor a receipt for it.

Six expenses follow, in roughly the order they arrive. The figures are the ones published by the courts and written into the statute; where the law fixes a method but not an amount, the method is what appears.

1. The $338 Fee Is Three Charges, and Part of It Pays the Trustee

The clerk collects $338 when a Chapter 7 petition is filed. Of that, $245 is the filing fee Congress wrote into 28 U.S.C. 1930(a), $78 is an administrative fee added by the Judicial Conference, and $15 is a separate trustee charge, all as listed on the federal bankruptcy fee schedule effective December 1, 2023.

The trustee's portion is larger than that last line suggests. Section 330(b) of the Bankruptcy Code directs that $105 of the filing fee be paid to the trustee serving in the case once the trustee's services are rendered, and the $15 is paid on top. In a case with nothing to distribute, those two amounts are the whole of what the statute pays the trustee for reviewing the petition, questioning the debtor at the meeting of creditors, and closing the file. The $15 charge also recurs if a closed Chapter 7 case is reopened or another case is converted into one.

2. Installments and Waivers Belong to Individuals Alone

A person who cannot pay $338 at once may file Official Form 103A with the petition, and under Bankruptcy Rule 1006(b) the clerk must accept the filing. The court then sets no more than four installments, payable within 120 days, with a possible extension to 180 days for cause. The committee note warns that a missed installment can lead to dismissal.

A waiver is narrower. Under 28 U.S.C. 1930(f) the court may waive the Chapter 7 fee for an individual whose income falls below 150 percent of the official poverty line and who cannot pay in installments, both conditions together.

A corporation or LLC has no access to either route and pays the full fee at filing.

3. Two Courses That Cost Little and Cost the Discharge When Skipped

Before filing, an individual must receive a credit counseling briefing from an approved nonprofit agency within the preceding 180 days, a requirement set by 11 U.S.C. 109(h). The statute allows a short deferral in exigent circumstances, but only on a certification that the debtor asked an agency for the briefing and could not obtain it within seven days, and the counseling must still be completed within 30 days after filing (45 if the court extends it for cause). After filing comes the financial management course. Section 727(a)(11) denies the Chapter 7 discharge to an individual who does not complete it.

The U.S. Trustee Program approves the agencies and course providers, and each sets its own price. The sums are small. What rides on them is not, since a debtor who pays every other expense on this list and forgets the second course has bought a case without its purpose, the way a person might pay a mover, a deposit, and first month's rent on an apartment and then leave the key in the landlord's mailbox.

4. The Lawyer Must Be Paid From Somewhere Other Than the Estate

In Lamie v. United States Trustee, decided January 26, 2004, the Supreme Court read section 330(a)(1) according to its plain terms and held that it does not authorize compensation from estate funds to a debtor's attorney unless the attorney is employed under section 327. In a Chapter 7 case, that means employment by the trustee with the court's approval. The debtor's own lawyer, who represents the debtor and not the trustee, stands outside that arrangement.

The practical consequence shapes how Chapter 7 engagements are written. Because the estate will not pay the debtor's counsel, the fee has to come from the debtor, or from someone paying on the debtor's behalf, and the arrangement may take the form of a fixed amount for a defined scope of work, collected before the petition is filed. Nothing in this page quotes such a fee, because the amount depends on the lawyer, the district, and the case, and a number printed here would be invented. The terms, though, can be read closely. A fixed fee covers what the engagement letter says it covers. It may or may not cover a lawsuit a creditor files inside the bankruptcy, and a merchant cash advance funder alleging that the owner obtained funding by fraud is exactly the kind of creditor that might file one, in which case the owner learns what the fixed fee did not include.

Whatever the structure, the fee is disclosed. Section 329 requires every debtor's attorney to file a statement of compensation paid or agreed within the year before the petition and its source, and Bankruptcy Rule 2016(b) sets a 14-day deadline for it, counted from the entry of relief. The statement sits on the public docket, beside the schedules.

But the analysis changes when the debtor is a company. No LLC or corporation may file at all without a lawyer, since an artificial entity appears in federal court only through licensed counsel, and it receives no discharge in Chapter 7 under section 727(a)(1). The fee buys an orderly end to the entity, or, more accurately, it buys a trustee's orderly liquidation of it, while the owner's personal guaranty of the entity's debts remains exactly where it was the day before the filing.

5. The Commission Comes Out of What Creditors Would Have Received

A trustee who sells assets and pays claims is compensated under section 330, subject to the ceilings in 11 U.S.C. 326(a). The percentages step down as the money grows: 25 percent of the first $5,000, 10 percent of the portion from $5,000 to $50,000, 5 percent from there to $1,000,000, and 3 percent above, all measured on what the trustee disburses to parties other than the debtor, including secured creditors.

Suppose, for illustration, that a trustee in a sole proprietor's case sells nonexempt tools and a trailer and distributes $20,000. The most the court could allow as commission is $1,250 on the first $5,000 plus $1,500 on the remaining $15,000, which is $2,750. If the same debtor's property is entirely exempt, the base is zero.

6. The Trustee's Own Professionals Are Paid Ahead of Unsecured Claims

With court approval under section 327(a), a Chapter 7 trustee may employ attorneys, accountants, appraisers, and auctioneers. Their compensation is awarded under section 330 and is an administrative expense under section 503(b)(2), which carries second priority under section 507(a)(2). Under the distribution order in section 726, priority claims are paid before general unsecured claims, so these professionals are paid before a merchant cash advance funder holding an unsecured claim receives anything.

In a small case the trustee may hire no one.

When Chapter 7 Is Not the Question

Delancey Street is not a law firm and has no role in preparing petitions, appearing before trustees, or advising on discharge, and an owner facing a creditor's fraud allegation, or weighing a personal Chapter 7 alongside a company's closure, needs bankruptcy counsel for that. What Delancey Street provides is a free, confidential review of merchant cash advance and related business balances to see whether a negotiated settlement is a realistic alternative, with independently licensed attorneys brought in when the matter turns legal. The two currencies described above apply to that route as well, in a different ratio, and an owner comparing the two is entitled to see both columns before choosing either.