Many individuals are surprised to find out that there is a cost to filing for bankruptcy.  It seems to be an unlikely concept that people in financial difficulty would have to pay money for the service of dealing with their debt.  The bankruptcy industry is a business like any other, and the service that a licensed Trustee provides to consumers is important.  The fees that debtors pay are a small part of providing Trustees with the revenue they need to run their practice.

When you file for bankruptcy, the first step in determining cost is to look at the household size and income level.  This information determines if you would be in a 9 month or 21 month bankruptcy scenario.

In a 21 months scenario, the cost of filing is calculated according to the guidelines set out by the Superintendent of Bankruptcy.   They are, in this case, also determined by looking at the household income on a monthly basis throughout the 21 month period of the bankruptcy.  You will be given an estimate of the fees by your Trustee at the outset filing for bankruptcy and will also be shown how this calculation works.  Payments required in a 21 month bankruptcy are known as surplus income, and should not vary at different Trustee offices.

In a 9 months scenario, your household income is below the government guideline for your family size, and therefore you would need to pay a set fee to your Trustee for the administration of your bankruptcy estate.  The fees set by Trustee’s vary from office to office, however they are all set within an acceptable range according to the government.  You will see different fee structures if you shop around, but there should be no major differences between firms.  For that reason, you have more freedom to choose a Trustee based on comfort and convenience, rather than simply basing your decision on cost.

What can change is the structure that each firm sets for paying the administration cost.  Some Trustees expect the fee to be paid in a small number of larger payments, other Trustees will work with your budget and will stretch the payments over a longer period of time so they are lower monthly.    All Trustees should be able to provide you with their payment expectations before you sign your bankruptcy papers.  In general, you can expect to pay in the range of $150.00 to $200.00 per month for a 9 month bankruptcy.   If this range is not affordable to you, do not hesitate to work with your advisor to see if a more suitable payment can be negotiated.  If that is not possible, they may also be able to refer you to a government program that can provide assistance with you bankruptcy fee.

There may be other factors in your specific scenario that affect the cost of your bankruptcy.  Again, these factors should be explained to you before you finalize your bankruptcy.  Remember that in bankruptcy you are no longer making payments to your creditors, which should free up money in your budget to cover the cost of filing for bankruptcy.