How Much Does It Cost To Go Bankrupt
Those who are deeply stuck in debt can consider declaring bankruptcy to wipe clean their debt slate and give themselves a fresh start. However, this move must be given a lot of thought. A lot of people fear considering filing bankruptcy because of the costs involved in doing so. This article will introduce you to the costs involved in going bankrupt to help you come up with a good decision for your financial situation.
Typical Cost Of Going Bankrupt
According to the United States Courts, the filing fee for bankruptcy is $274 for Chapter 13 cases (Individual Debt Adjustment)
and $299 for Chapter 7 cases (Liquidation Under the Bankruptcy Code)
The attorney's fee is a different cost when you file for bankruptcy. The average cost of attorney's fees today is $1,700. However, some lawyers may charge per hour, usually $100 to $300.
Factors That Affect The Price Of Filing For Bankruptcy
Type of bankruptcy. The U.S, Bankruptcy Code categorizes bankruptcy in several types. However, Chapter 7 and 13 are the two most common bankruptcy types. Chapter 7 refers to a straightforward liquidation of all the assets of the debtor and sharing all the proceeds to the creditors. Check more facts on the Chapter 7 bankruptcy here. On the other hand, Chapter 13 covers an adjustment of the debts of the individual. It allows the debtor to keep his properties and pay debts in a term of three to five years. The U.S. Courts website has a clear explanation of this type of bankruptcy.
Case. The difficulty of your case can greatly affect the attorney's fees. The more difficult your case is, the more you can expect a lawyer to charge you.
Lawyer. Different lawyers charge differently for handling bankruptcy. Big cities where there is a high cost of living charge more on attorney's fees.
Additional Costs
Bankruptcy court miscellaneous fees can add up to the total cost of going bankrupt. Here is a price list of miscellaneous services as issued by the U.S. Courts:
- Reproduction of any document ($0.50 per page)
- Certification of any document ($9)
- Exemplification of any document ($18)
- Reproduction of an audio recording of a court proceeding ($26)
- Filing an amendment($26)
- Search of bankruptcy court records ($26 per name or item)
- Payment to trustees ($15)
- Retrieval of a record ($45)
- Filing an appeal ($250)
Filing a motion to convert a Chapter 13 case to a Chapter 7 case is priced $10.
A motion to reopen a case is also possible when filing for bankruptcy. However, filing a motion to reopen a case is not free. The filing fee is $245 for a Chapter 7 case and $235 for a Chapter 13 case.
Tips Before You Decide To Go Bankrupt
Understand that bankruptcy must be declared only when there are no other alternatives left. Take note that a bankruptcy will reflect on your credit reports for up to 10 years. As per the U.S. Bankruptcy Code, you are required to get consumer credit counseling from entities approved by the U.S. Trustee to help you with deciding on the declaration of bankruptcy. Here is a database of U.S. Trustee-approved credit counseling agencies from the Department of Justice.
DeclaringPersonalBankruptcy.net has a form that you can use to evaluate the possibility of going bankrupt yourself.
Know the bankruptcy laws specific to your state to analyze your stand when filing bankruptcy. Check out these bankruptcy laws per state.
Check whether or not you are qualified to file for bankruptcy. One eligibility requirement is that you must live, have a residence, place of business or property in the United States. Taking the means test and credit counseling is also a requirement for filing bankruptcy. The means test is your way to determine whether you are eligible for Chapter 7 or you should file under Chapter 13. More bankruptcy requirements are explained here.
Choose a qualified lawyer to help you with the whole process. A good lawyer must guide you from deciding what kind of case your situation is best suited to until the very end of the process. You must do a background check of the trainings and experiences of the lawyer in handling cases similar to yours. BankruptcyHome.com lists suggestions on how you can choose the right bankruptcy attorney for your case. You can use the Attorney Finder feature from the National Association of Consumer Bankruptcy Attorneys to find a qualified lawyer near you.
If you file a Chapter 7 bankruptcy case, you can be eligible for a waived court fee. However, here, you are not allowed to hire a lawyer to help you out with the whole process. To know more about the Chapter 7 Fee Waiver, check the U.S. Courts website.