How Much Does Chapter 13 Cost? 5 Costs Including the Lawyer Paid Through the Plan

There are five parts to the cost of Chapter 13. First, the $313 court filing fee. Second, the lawyer’s fee, usually between $2,500 and $5,000. A Chapter 13 attorney usually gets paid partly up front, and partly through the monthly payment over the life of the case. Then comes the trustee’s fee, also built into that monthly plan payment, taken as a percentage each month. Finally, there are the two counseling courses you must take, one before filing and one after, each usually in the $0-$50 range.

The Chapter 13 Lawyer Fee

In Chapter 13, most attorneys do not expect to be paid in full before filing the case. They charge a lower up-front fee to start the case. Then, after you’ve filed, a portion of the regular payment every month also gets paid to the lawyer. Since your fees go through the plan, they have administrative priority, which puts them ahead of regular unsecured creditors, like credit cards. Chapter 13 is for people with a regular income, but not necessarily a large lump sum.

In Chapter 7, the lawyer’s fee is usually paid in full before the case starts. There is no payment plan, so there is no place to put the fee afterward. The Chapter 7 filing fee is $338.

If you have a small business, you may wonder whether Chapter 13 is for you. Chapter 13 is open to self-employed people and owners of unincorporated businesses, if unsecured debts are below $526,700 and secured debts are under the limit too.

The amount you pay your lawyer for a Chapter 13 depends partly on the kind of case you have and the local custom. Some courts allow a ”no look” fee, in a range of $3,500 to $4,250, for example, in the Middle District of Georgia. This means your lawyer does not have to justify a fee under a certain amount. However, complex cases such as cramdowns, lien stripping and claims disputes may cost more. In some districts, such as Arizona, the court may allow a higher fee for a Chapter 13 filer who owns a small business that has to file monthly operating reports.

When the lawyer needs extra fees for complex work above the no-look amount, there is a formal fee application process in front of the judge, to explain the time and effort required. The trustee and creditors have an opportunity to object, and the judge has discretion to deny part or all of the additional request. There is nothing hidden about the fees, since they appear in the plan.

A “no look” fee helps protect you. The court has already decided that the amount is reasonable for the type of case you have, so it is unlikely to be denied. The fee amount that you see quoted is therefore likely what the court is willing to approve, with the option of a request for more.

The Chapter 13 lawyer fee should cover services like

• gathering and reviewing information on income and expenses;
• preparing the petition, schedules and plan;
• meeting the debtor and creditors;
• resolving objections;
• dealing with changed circumstances.

You get three to five years of representation for your Chapter 13 lawyer fee, not one-time paperwork.

The $313 filing fee cannot be waived in Chapter 13. The $313 includes $235 in case fees and $78 for the administrative fee. If you can’t pay the full amount up front, the court may let you pay it in up to four installments, but you must pay it off within 120 days (or 180 for cause). If you miss an installment, your case may be dismissed. You must make this payment before the lawyer gets any further fees. The lawyer fee does not include this $313 filing fee, because the lawyer does not receive the filing fee; it goes to the court. This basic filing fee is uniform nationwide. The filing fee pays to open the case, assign a case number and begin giving notice to creditors to attend a hearing.

The Trustee’s Fee

The plan also pays for the trustee’s fee. It’s a percentage of each dollar collected and paid out through the plan. It varies by district and is capped at 10%. The trustee fee does not go by a separate check, but is deducted from the top of each payment you make. Payments to the trustee start within 30 days of filing the petition, even before confirmation of the plan.

Each monthly plan payment goes toward a mix of creditors. In a simple plan, the breakdown might look something like this:

• First, a percentage, capped at 10%, goes for the trustee fee.
• Next, the lawyer gets paid.
• Afterward come priority claims.
• Then comes a pool for general unsecured creditors, such as credit cards, sharing a portion of the monthly payment.

Finally, the two mandatory courses may run you $0 to $50 each. If household income is under 150% of the federal poverty level, you are presumed eligible for a fee waiver or reduction.

What this means is, the cash you need to get started on your Chapter 13 is the $313 filing fee, the cost of the first course and whatever deposit the lawyer wants. Also, ask the lawyer at the first meeting for the fee amount and how much deposit is needed to start. If the case is dismissed early, fees already paid out usually are not refunded. If you decide to dismiss your case early, or if it is dismissed without completion, you should ask how your lawyer fee agreement handles the part that had not yet been paid.