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Chicago Bankruptcy Question: How much does a Chapter 13 bankruptcy cost?

Chicago Bankruptcy Question of the Day: How much does a Chapter 13 bankruptcy cost?  The basic answer to this question is very simple.  In the Northern District of Illinois, Eastern Division (which covers the greater Chicago area), the bankruptcy court has approved and strongly recommends usage of a fixed fee agreement for Chapter 13 bankruptcy cases.  The legal fee approved by the Court Approved Retention Agreement (CARA) is $3,500 and it is a flat fee covering legal work from start to finish of your Chapter 13 bankruptcy in Chicago. 

In addition to the legal fees, you will be required to pay a filing fee, currently $281.  The filing fee is fixed nationwide and is paid to the court to cover their expenses, though usually your attorney will run the fees through their office's trust account to keep things simple for their clients.  Finally, there are usually some expenses that must be paid to cover the required credit counseling class and various reports and documents that the attorneys gather as part of the bankruptcy filing "reasonable investigation into the financial affairs of the debtor" requirement.  These expenses vary firm to firm, ranging from $20 to up to $400, depending on which bankruptcy lawyers you use and the complexity of your case.

With that said, you normally do not have to pay upwards of $4,000 to have your Chapter 13 case filed.  Most bankruptcy attorneys in Chicago will require you to pay at minimum the filing fee and the expenses of the case before your case can be filed.  You may also be asked to pay some of the legal fees up front, depending on the facts of your case.  Any amount of the legal fee that is not paid up front will be rolled up into your Chapter 13 repayment plan.  You will make your monthly payments to the Chapter 13 trustee and, when the Chapter 13 trustee distributes funds to your creditors, they will also distribute funds to your attorneys. 

When selecting a Chicago bankruptcy lawyer to represent you in a Chapter 13 bankruptcy, keep this structure in mind.  If a bankruptcy lawyer wants to charge you more than the fixed $3,500 fee, do not be shy in asking why.  Ditto if the bankruptcy attorney wants you to pay the full fee up front.  Ask what the expenses cover and to whom they are paid.  When filing for Chapter 13 bankruptcy in Chicago, it is extremely important that you trust your attorney since you are going to be with them for a long time.  Ask the hard questions and expect straight answers.  If you don't like what you hear, hire someone else.  The Chicago bankruptcy attorneys at Ledford & Wu will always give you straight answers, put all fees, costs and filing fees in writing, put a payment plan in writing and ensure that you are comfortable with the process.  Call us today for a free consultation.

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