Cost of Bankruptcy

Let's talk about the Cost of Bankruptcy.  So you have finally decided that bankruptcy is the last resort because you have no cash and liquid assets and there is no way to pay the debt off.  However, you cannot ignore the Cost of Bankruptcy.  Most people filing for Bankruptcy files the Chapter 7 Bankruptcy. This means they are seeking court protection against creditors by liquidationg their assets.

The cost of bankruptcy is $299(unless you get a waiver) and it normally takes about three months. To meet the waiver requirement household income must be less than as follows: As per household size 1 - $1,196.25 per month, 2 - $1,603.75/mo, 3 - $2,011.25/mo, 4 - $2,418.75/mo. Once you take the Chapter 7 petition and the fee waiver application to the clerk, you may need to see a judge and explain why you cannot pay the fee. Now, if you're filing the Chapter 13 Bankruptcy, which means you are willing to payback some of your debt. The court fee is $274.

Ok, that's all good. However, in some cases, you may get denied of your application and will have to file under different chapter. Reapplying will inevitably add to your cost. Also, there are numerous other fees. Such as, abandonment of property, reopening fees and the withdrawal of reference fees.

If you're planning on obtaining an attorney, you can expect to pay an additional $1,500 or more in legal fees. Obviously different attorneys charge different. My suggestion would be to see a young attorney with only 2-3years of experience with filing bankruptcy. They know the procedure, but doesn't come with high pricetag reducing the cost of bankruptcy. The average attorney fee for Chapter 7 runs little below $1,500 whereas, Chapter 13 attorneys charge over $2,000. Of course, you can save most of the money by representing yourself with the help of online materials or legal books.

Beside from court cost and attorney cost, there are other cost of bankruptcy.  How about what happens to your credit worthiness. For the next 8-10 years, your credit will be in shambles and that will result in higher interest rates for buying a house or a car and even insurance. Your loan lenders will not look at you the same way.

Therefore, it is very important when you decide to file bankruptcy to think about cost of bankruptcy.  Consider the aftermath and it should be the final choice. In mean time you need to think of alternative courses of action to filing bankruptcy and if you can manage yourself and pay off your debts, you need to consider doing that. You may wish to seek attorney's advice on course of action and options available, considering your unique situation.  Cost of bankruptcy is something you have to heavily weight when considering bankruptcy.