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

The filing fee is only $338 to the court. But your actual out-of-pocket costs are far more: you must take credit counseling before filing and complete a financial-management class after filing. The two main ways to spend more money on your chapter 7 case are in attorney fees and the trustee’s commission. For an individual filing, you can figure this as $338 (court fees), plus counseling (up to about $50), plus the lawyer (the $1,450 average, give or take). That comes to $1,838, not counting the course at the end.

The Cost to File

The court charges an initial $338 fee to file your case. This includes a $245 filing fee and a $78 administrative fee, plus a $15 charge for a trustee. To do a joint petition with your spouse, the filing fee is still only $338. You may either pay the full amount up front, or apply for an installment plan, whereby you must generally complete your payment to the court within 120 days of your filing. The plan is limited to 4 installments, with extensions “for cause” that still require you to finish by 180 days after your case is filed. The filing fee may also be waived by the court if your family income is below 150% of the poverty line and you cannot pay in installments. The installment plan and the waiver of fees are only open to you as a private individual, not a corporate debtor. And if you don’t pay the filing fees on time, your case can be dismissed.

Before your case is filed, you must complete an approved credit counseling class. You must complete the course within 180 days before filing. As to the counseling fee, generally speaking, anything up to $50 is presumed to be a reasonable amount. If a provider charges more, it must justify it to the Office of the United States Trustee. After your case is filed, you must also complete a debtor education class, which provides you with basic personal finance skills. If your household income is below 150% of the federal poverty line, the agency should waive or reduce the course fee. If you forget to take the course, the court can deny your entire discharge, wasting what you already spent on your case.

The biggest part of the cost to file will usually be your attorney fee. One survey by Martindale-Nolo, reported in 2023, found that consumers paid, on average, $1,450 to their attorney in a Chapter 7 case, plus the court’s filing fee. That survey covered consumer filers. And since the discharge has many exceptions, talk it over with that lawyer before you file.

The Trustee’s Commission

When a Chapter 7 case is filed, the U.S. Trustee appoints a Chapter 7 trustee, who is responsible for selling, or liquidating, any of the debtor’s property that isn’t exempt. The trustee’s commission, under 11 U.S.C. § 326(a), is based on the amount disbursed or turned over to creditors, and the law caps it at 25% of the first $5,000 or less, 10% of any amount between $5,000 and $50,000, 5% of any amount between $50,000 and $1 million, and “reasonable compensation” not to exceed 3% of any amount over $1 million - the commission can actually be less. This payment is only found in cases with a distribution to creditors. For example, say you have a Chapter 7 case where the trustee, after selling non-exempt assets, makes a disbursement of $20,000 to the creditors. If you do the math here, the most the trustee could get is $1,250 (25% of the first $5,000) plus $1,500 (10% of $15,000, the remainder after the first $5,000), so the maximum trustee’s commission would be $2,750. The trustee’s commission in your case is paid out of your case assets.

Most individual Chapter 7 cases are no-asset cases, in which the debtor has no non-exempt property and nothing to distribute to creditors. In this scenario, the trustee doesn’t get a commission from the distribution, although she is paid $105 of your filing fee plus the $15 trustee’s surcharge.

If your case does involve property that is not exempt, then it can be sold for the benefit of your creditors. If you own a business this means that the trustee will examine your business to see if it would return any money to the creditors of your estate. Before you file your case, you will want to know how much of your property the law lets you keep after filing - this is called exempt property, as it is exempt from liquidation.

Beyond these costs, after the petition is filed, you may need to pay other fees such as amending creditor schedules (usually $34) or reopening a case (usually $245 plus a $15 trustee fee). The court can waive these fees.

Corporations and Partnerships in Chapter 7

If you’re operating a corporation or partnership in bankruptcy, Chapter 7 doesn’t offer you a discharge. So any claims against the corporation remain intact and enforceable against the business entity. Instead, you should consider Chapter 11 for your business, or Chapter 13 for your sole proprietorship, or reaching informal, out-of-court agreements with your creditors.