Tuesday, February 21, 2012

The Cost of Bankruptcy

The question examined in a recent national study was “whether the 2005 amendments to the Bankruptcy Code improved bankruptcy law and practice or whether the amendments  made the system more cumbersome and costly to use.”  Cumbersome and costly appears to be the answer.  You can view the full report here:  The Consumer Bankruptcy Fee Study

The study found that the 2005 changes increased debtors' costs to file bankruptcy, without generating a statistically significant increase in distributions to creditors.  Nationwide the total cost to file a no-asset Chapter 7 case increased 51%.  Locally, Oregon ranked third nationally with an 85% increase in Chapter 7 fees.  The largest increase in Chapter 13 fees was in Idaho (a 115% increase).

In Washington, there was a 27% average increase in Chapter 13 costs.  The increase was far from uniform though:  fees rose 6% in Eastern Washington and 29% in Western Washington.  The statewide increase in  Chapter 7 fees was 45% (34% in Eastern Washington and 52% in Western Washington).

Another observation gleaned from the data: at $538.27, Eastern Washington appears to have the lowest current average Chapter 7 attorney fee among judicial districts nationwide!

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