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The new bankruptcy laws have increased the cost to file bankruptcy due to the additional work attorneys, and those filing bankruptcy have to do in order to complete the bankruptcy petition, and have it accepted by the courts. Below you will find a breakdown of all the costs associated with filing bankruptcy.

Pre-Bankruptcy Credit Counseling - As we detailed in our post on the requirements of bankruptcy credit counseling and personal financial management course, every filer must complete a credit counseling course within 180 days before filing bankruptcy. The course fee varies depending on the location, but the average cost is about $40.

Bankruptcy Petition Preparation - The Federal Bankruptcy Code allows bankruptcy filers to choose to prepare their bankruptcy petition themselves, hire an attorney, or hire a non-attorney bankruptcy petition preparer (NABPP). If you plan on filing bankruptcy by yourself you will have to buy the official bankruptcy forms ($19.95), find free bankruptcy forms online ($0), or buy bankruptcy software that will help walk you through the process ($49.95). These costs are minimal, but if you are at all uncomfortable with completing your bankruptcy petition by yourself, you will likely want to hire an attorney.

For a Chapter 7 bankruptcy, the average cost for an attorney is $1500, and for Chapter 13 bankruptcy the average cost is now around $3500 due to the extensive paperwork and background checks that are needed to complete the bankruptcy petition. In some circumstances your attorney costs can be included in the bankruptcy filing, so it’s important to get all your options. If you are knowledgable about bankruptcy law but want a professionally prepared petition you can hire a NABPP. The average cost of an NABPP is $150 as it is typically set by each state, but some bankruptcy districts are extremely hard on filers who use NABPP’s as they view them as taking business from attorney’s and may give you a hard time about your petition, even if everything is correct.

Bankruptcy Petition Filing Costs - Once your petition is prepared, there are court filing fees that must be submitted when you file your forms. There are options for pay in installments, and other options, but we won’t discuss those here. The filing costs for bankruptcy petitions are $299 for a Ch 7 and $274 for a Ch 13.

Personal Financial Management Course - After your bankruptcy petition is filed you have one more fee to go. Once your forms are accepted you will get a notice in the mail that you need to complete the personal financial management course. Just like the credit counseling course, the cost will vary depending on the location of the course but the average cost is around $30.

Total Cost To File Bankruptcy - If you complete everything yourself you can file bankruptcy for as low as $369, and if you use a bankruptcy attorney, filing bankruptcy can cost you upwards of $3869 or more.

Part of the new bankruptcy laws is mandatory credit counseling that must be complete before filing bankruptcy and a personal finance certification course that must be completed after filing your bankruptcy petition. The two courses are to help you determine if bankruptcy is your only option and hopefully help you create a better financial plan for moving on after your bankruptcy is completed.

Credit Counseling - The credit counseling must be completed with 180 days before filing your bankruptcy petition. Each state has credit counseling centers that have been approved by the bankruptcy courts. The counseling centers offer the credit course in person, and some offer the course over the phone or online.

The course contains three portions: the first portion looks at your current financial situation including your debts and assets, the second portion creates a plan to help you budget your current debts, and the last portion of the counseling takes a look at your options including filing bankruptcy. The credit counseling is not set up to tell you that you cannot file bankruptcy, but it is there to try to get you to take advantage of other options that may be available. Speaking with a bankruptcy attorney at the same time can help you make the right decision for your situation. The average cost of the credit counseling is about $40.

Personal Financial Management Course - After your bankruptcy petition has been filed, the bankruptcy court will instruct you to attend a personal financial management course at an approved location in your bankruptcy district. Just like the credit counseling, the course can typically be completed in person, over the phone or online. This course is designed to help you make good financial choices after your bankruptcy and covers topics like budget development, smart shopping, and the wise use of credit. The average cost of the personal financial management course is about $30.

Keep in mind that both of these requirements were supported by credit companies that don’t want your debt to be wiped out, it’s not because everyone who files bankruptcy does so because they simply didn’t manage their money the right way. Most bankruptcy filers file due to excessive medical bills, a job loss or divorce that created financial problems.

Obama announced his plans to help 9 million Americans save their homes in Mesa Arizona today. According to the NY Times, the plan consists of three objectives:

* The first will help homeowners that are current on their mortgages but paying high interest rates and can’t refinance due to lack of equity or upside down loans.

* The second component will help those at risk of foreclosure by providing incentives for lenders to negotiate the terms of the mortgage to lower payments.

* The third component will ensure credit is available for new loans for buyers by giving another $200 billion in financing to Fannie Mae and Freddie Mac

Obama’s plan goes into affect on March 4th which is when all the details will be available for review. The plan gives $75 billion for loan modifications to reduce payments to 31 percent of the borrowers gross monthly income, but if the lenders believe the incentives will cost them more than going through the foreclosure process as normal, they may not agree with the modifications. Part of the plan, which will have to be voted into law, also calls for allowing bankruptcy trustees to change mortgages during the bankruptcy process, giving borrowers more options to keep their home.

The Obama housing plan is not expected to stop all foreclosures including those who bought knowing they could never make the payments, or investors who bought in order to flip the property for a higher price.

Michigan Democrats have proposed a law that would create a mandatory 90 day period after receiving a notice of foreclosure to allow homeowners time to meet with their mortgage lenders in order to negotiate mortgage modification terms.

The 90 day period is designed to force lenders to look at each homeowners position in order to determine if they qualify for to change their mortgage according to federally approved financial standards. If the borrowers qualify, banks and lenders would have to negotiate or go through the courts to foreclose. If the borrower didn’t qualify, the lender could take back the house in a faster process.

With more than 145,000 houses in foreclosure in 2008 and 11,400 foreclosure in January of 2009, the Democrats are trying to give lenders and borrowers options without putting a moratorium on foreclosures which could dry up home loans from banks and bring property values down even further.

For those homeowners that don’t qualify under the proposed guidelines, the 90 day waiting period would give them time to find new living arrangements and any other changes they need to make with the help of a counselor.

PNC has suspended foreclosures on mortgage loans until March 13 or the start of the loan modification program that is currently being developed by the U.S. government. All loans owned and services by PNC and National City Mortgage, whick became part of PNC on December 31, are included in the suspension of foreclosures.

PNC is providing loan modification programs in order to help mortgage holders that are in danger of going into foreclosure, by helping them reduce interest rates, extend payment terms, and offering forbearance agreements.

Shares of PNC dropped $2.48, or 8.8 percent, to $25.72 after the announcement.