Bankruptcy Cost
Easy Credit
Nowadays far too many of us Americans depend on credit. This is often the result of lack of financial education, overwhelming credit card marketing and the eventual irresponsible spending spree that follows. Credit can simply push you to buy things that would otherwise be outside of the family budget. On the other side, credit can be greatly necessary, for example, when unexpected family emergencies come up such as medical bills not covered by insurance.
But if we’re not careful, spending credit can get us into deep trouble. It can lead to a spiral of widening debt and interest. Unfortunately, this situation tends to get worse over time as individuals find themselves buried deeper and deeper in debt. When there seems to be no other solutions to turn to, bankruptcy is often considered as a chance for a fresh start. But what are the costs of declaring bankruptcy?
Bankruptcy Filing Fees
To begin with, the government charges a fee for you to file for bankruptcy. At the time of this writing (late 2009), Chapter 7 bankruptcy filings cost $274, while a Chapter 13 bankruptcy costs $189.
Bankruptcy Attorney Fees
To minimize the financial and future damage done by filing for bankruptcy you absolutely should seek the guidance of a professional. Even though spending more money may be the last thing you feel like doing, remember this money is paying for the benefit of bankruptcy experience and knowledge. Bankruptcy attorney fees is money well spent. If your bankruptcy case is successful this means that you will have a tremendously easier time dealing with your debt. Like night and day. Still, like anything else, shop around for help you feel you can afford and are comfortable with.
Long-Term Cost of Bankruptcy on Credit
In a much larger sense, though, the cost of bankruptcy goes far beyond the direct costs, filing fees and/or your Bankruptcy attorney fees. Your financial reputation will be damaged for the next seven to 10 years, and this can make it quite difficult to secure future credit. It probably won’t mean that can’t get credit, it will just be much more expensive. Having declared bankruptcy, banks will label you as ‘high risk’ and will have to pay higher interest rates as a result.
Bigger Worries
Of course, your credit score will probably be the least of your worries. If you’ve reached the point where bankruptcy is a must, then your credit score is not a priority. The truth is that you can rebuild your credit gradually, and you shouldn’t be too quick to take on new loans anyway because you don’t want to end up in the same situation.
Despite the drawbacks of bankruptcy, you have to make the best decision possible for you and your family. This means taking a good look at your finances and learning as much as possible about the bankruptcy process before you make your decision. That’s why we created this website, to help arm you with good knowledge, so that you can overcome this challenging time.