How Much Does it Cost to File for Bankruptcy? Can I Afford Bankruptcy if I Can't Pay my Debts?
One of the most common misconceptions I hear as a bankruptcy attorney is some variation on this statement:
"How can someone afford to file for bankruptcy if they can't pay their bills?"
The way of thinking that produces a statement like that - the assumption that because someone can't afford a house payment, car payment or credit card payment, they must not make any money or are unwilling to pay anything - is extremely misguided. It represents a fundamental misunderstanding of the circumstances that typically lead someone to file bankruptcy, and does not accurately reflect the financial status of most people that I see filing bankruptcy. Like most assumptions, it reveals more about the individual drawing the assumption than the person they're attempting to judge.
The prospective clients I speak to who are thinking about filing bankruptcy are hard-working individuals who have been affected by financial hardships that they cannot control, such as loss of income from a job, increased medical costs from sudden health troubles, or sky-high interest rates on loans or credit cards. While they continue to receive a steady income through work, social security, or other benefits, the hardship they experienced has made it impossible to catch up payments on things they were unable to pay during that difficult period. Credit card companies, finance companies, mortgage companies and other financial institutions, no matter what they tell you, are unforgiving and profit from consumers defaulting on their obligations. So while a prospective client may have an income that now allows they to restart making payments, banks and credit companies demand not only that but interest, late fees, costs, and any number of other fees that act to make it extremely difficult for an individual to get back on their feet.
Which leads us back to the original question - how much does it cost to file bankruptcy in South Carolina?
I typically break costs down to prospective clients in three separate categories: bankruptcy credit course and financial management course costs, bankruptcy filing fee, and attorney's fees.
Credit Counseling & Financial Management Course
The bankruptcy rules require you to complete two educational courses - one (Credit Counseling) prior to filing your case, and one (Financial Management/Debtor Education) before you case is finished. As private companies supply the course, a fee is charged to complete the course and obtain the certificate that must be filed with the bankruptcy court.
You must take the course through a provider that has been approved by the U.S. Trustee's Office.
Costs vary depending on the provider, and it's up to you to determine who you want to take the course through.
Your bankruptcy filing fee depends on if you file a Chapter 7 or Chapter 13. The fee is paid directly to the bankruptcy court, and is required to file a case in South Carolina.
The standard Chapter 7 bankruptcy filing fee in South Carolina is $335.00. It is paid at the time of filing. You may qualify for waiver of the fee if you cannot afford it. Rules allow for an application to pay the filing fee in installments as well, where you can make up to four payments within 120 day of filing totaling $335.00.
The standard Chapter 13 bankruptcy filing fee in South Carolina is $310.00. The fee is paid at the time of filing, and you cannot apply to have the fee waived based on income. Rules allow for an application to pay the filing fee in installments as well, where you can make up to four payments within 120 day of filing totaling $310.00.
The final cost to consider in filing bankruptcy is attorney's fees. It's also the most difficult cost to plan for, as - speaking only for my firm and the way I work with client's on fees - each case is different.
Our goal is to help clients seek relief from financial hardships that affect their lives. As an attorney, my main directive is to assist clients in whatever matter I might be handling to improve their well-being and find solutions to their issue. We prioritize that main goal over setting any minimum attorney's fee - ultimately, a client's individual circumstances and the complexity of their case determines what a fee would be, rather than a need or goal to profit from a case. Any bankruptcy filer or organization advertising a "no money down" bankruptcy or unbelievably low fee does not have your best interests at heart.