How much does it cost to declare bankruptcy
If you’re in a big financial mess, the first thing you need to do is to examine your situation and find out exactly where you stand. Get all of your paperwork together and see how much you owe and compare your income to your expenses. From this point, you can proceed to examine all of your options for getting out of debt, including a variety of alternatives to bankruptcy.
If, after examining all of your possibilities, you don’t see a way out then bankruptcy might be necessary. One of the concerns that you might have is how expensive the actual process is. So how much does it cost to declare bankruptcy? You have to pay the court a fee of $274 when filing chapter seven bankruptcy, while the fee for chapter 13 bankruptcy is $189.
What’s the difference between the two options above? Well, the chapter seven bankruptcy is what most people think of when they hear the term bankruptcy. Its purpose is to get rid of all of your debt in return for the liquidation of your assets. Actually, in practice most people don’t have very many assets to speak of when filing for bankruptcy. Meanwhile, their home is usually protected by a homestead exemption in most states.
Chapter 13 bankruptcy creates a payment plan for you to use for the next several years. You don’t have to give up any of your assets, but you don’t get your debts wiped out (or discharged) either. Still, most people don’t end up paying the full amount that they originally owed their creditors anyway.
Of course, if you’re concerned about the actual cost for the bankruptcy process, you can’t ignore legal fees. Having a lawyer is a must when deciding whether or not bankruptcy is right course for you, and it definitely is necessary when actually going through the process. This is especially true when you consider the recent changes in the new bankruptcy law.
The good news is that bankruptcy is designed to help you with your current bills, either by eliminating them or by creating a long-term payment plan. This should help you pay for your legal costs because you don’t have to worry about continuing to be buried under your debts each and every month.
This assumes that your bankruptcy case is successful. Even before your case is resolved, you receive a bit of a breather as soon as you file your case with the court. You get what’s called an automatic stay which prevents your creditors from trying to collect, garnishing wages, or even contacting you until your case is resolved.