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.

Don't feel guilty for filing for Bankruptcy

So you have considered filing for bankruptcy.  Have you figured the cost of bankruptcy?  However, don't feel guilty for filing for bankruptcy.  You see our American economy is based on spending.  About 2/3 of the gross national product comes from us consumers spending our hard-earned dollars for goods and services we feel essential to our daily lives.  Do you remember how George W. Bush telling Americans to spend more after the 9/11 event?  They told us it was our patriotic duty to spend.  As Americans, we have learned from birth that buying all sorts of goods and services is a good thing.  Everyday we are surrounded by professional persuaders that all say to buy, buy, buy.

These highly persuasive commercials convinced us to buy and for those of us who couldn't afford to pay there were credit card companies.  Credit card companies were more than eager to offer everyone including the one's with more debt than they can pay off.  In recent years, billions of credit card solicitations were mailed to U.S. residents each year - roughly ten solicitations for every man, woman, and child.    And wouldn't you guess, the largest growth sectors for credit cards have been college students and people with bad credit ratings.  The college students were target because they will soon graduate and go into workforce.  That means they will have many new needs and what's going to pay for that, but with credit card.  They will soon get a job and will have to setup their life style as a working man and woman.  So they were prime target for credit card company.  Also, if college students weren't able to payoff, their parents would bail them out, another part of cost of bankruptcy.  And for the people with bad credit, meant they would have to pay high interest rates to keep using the card, so that's good profit for credit card companies.

With new credit cards in the wallet, it was easy to go out and spend and spending way beyond our means.  If for whatever reason we can't pay for the things we need, we feel fear and guilt.  However, it is through this spending our economy grew so our American economic life is very contradicting.

It was in everyday news of billion dollar bailouts for poorly managed financial institutions, should you really feel guilt ridden about the debts you've run up?  That's something only you can decide, but you know that large creditors expect defaults and bankruptcies and consider them as part of doing business, another cost of bankruptcy.  Even though banks won't recover on those wiped out and file bankruptcies, they have been so much more profitable from the extensive credits they gave out.

Bankruptcy is a vital part of our legal system.  It is about forgiveness not retribution.  It certainly keeps families together, gives income and resources for children, reduces suicide rates and halts homeless from growing.  In return bankruptcy renews a person and brings back  a patriotic consumer.  Bankruptcy provides fresh start to individual when faced with unexpected jobloss, piling medical bills, or just simply snowed under impossible debt, bankruptcy allows fresh start and  a positive outlook on life.  Check out the Cost of Bankruptcy article before filing one.

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