How Much Does a Bankruptcy Chapter 7 Cost as a Business?
Posted on Thursday, November 2nd, 2023 at 4:57 pm
Anyone considering filing bankruptcy for their business is, by definition, concerned about their finances. As such, it is understandable that one of the first questions on your mind might be, “How much does bankruptcy Chapter 7 cost for my business?” While the filing fees for Chapter 7 are the same in every case, the total cost, including legal fees and expenses, can differ according to the particularities of your situation.
How Does Chapter 7 Bankruptcy Work for Businesses?
Chapter 7 bankruptcy is a process that allows businesses to liquidate their assets to pay off their debts. After a business files for Chapter 7 bankruptcy, a trustee will be assigned to oversee the sale of the business’s assets. The proceeds from these sales are then used to pay off creditors in a specific order of priority, as determined by bankruptcy law.
One of the main advantages of Chapter 7 for businesses is that it can provide a relatively quick and straightforward way to wind down operations and discharge debts. Unlike Chapter 11 or 13, which involve reorganization and repayment plans, Chapter 7 allows businesses to essentially start from scratch.
However, it’s important to note that not all businesses are eligible for Chapter 7. To qualify, the business must pass a “means test” demonstrating that its income is below a certain threshold. Additionally, certain types of debts, such as taxes and employee wages, cannot be discharged through Chapter 7.
What Is the Filing Fee for Chapter 7?
The fees for filing Chapter 7 bankruptcy are governed by the bankruptcy court in the federal district where you are filing. In the Eastern District of North Carolina, Chapter 7 fees are:
- $245 filing fee
- $78 administrative fee
- $15 trustee fee
In total, the fees for filing Chapter 7 in the Eastern District of North Carolina come to $338.
Is It Cheaper to File Chapter 7 or 13?
The fees for filing Chapter 13 bankruptcy are slightly different. They include a $325 filing fee in addition to the $78 administrative fee. There is no trustee fee. As such, the total fee for filing Chapter 13 in the Eastern District of North Carolina is $313, which is $25 cheaper than Chapter 7.
However, the process of filing Chapter 13 bankruptcy is far more complex and time-consuming. As such, you will likely incur more legal fees when filing Chapter 13 than Chapter 7, making it significantly more expensive in the long run. However, if Chapter 13 is a more attractive bankruptcy option for your business in the long run, it might be worth the added expense. Consult with a knowledgeable business bankruptcy attorney to learn more about which option best suits your situation.
How Much Does a Bankruptcy Lawyer Cost?
The fees a bankruptcy lawyer charges can vary depending on the circumstances of your situation, including the complexity of your case and the experience level of the attorney. On average, businesses can expect to pay anywhere from $1,500 to $5,000 in legal fees for a Chapter 7 filing. Some attorneys may also offer affordable payment plans.
While it may be tempting to try to save money by handling the bankruptcy process on your own, this is generally not recommended. Bankruptcy law is complex, and even small mistakes can have serious consequences. An experienced bankruptcy attorney can help ensure that your filing is handled properly and that you are taking full advantage of the protections and benefits available to you.
While the cost of hiring a bankruptcy lawyer may seem daunting, it can be a worthwhile investment in the long-term financial health of your business. By working with an experienced professional, you can help ensure that you are making informed decisions and taking the necessary steps to move forward.
Contact an Experienced North Carolina Business Bankruptcy Attorney Today
If you are struggling to get your business out of debt, Chapter 7 bankruptcy can be an effective option to find the financial relief you need to make a fresh start. However, a successful filing depends on making well-informed decisions from the beginning of the process. Working with an experienced business bankruptcy lawyer can help you understand what your options are, as well as the advantages and disadvantages of filing. If you do decide to file, your attorney can guide you through the process and help you avoid costly pitfalls.
The seasoned legal team at Bradford Law Offices understands how to maximize the benefits of the bankruptcy process. We will ensure you have all the information you need to get through this challenging time. Call us today at (919) 758-8879 or contact us via our online form to learn more about how we can assist you.