Is it expensive to declare bankruptcy?
One of the obstacles that keep people from considering bankruptcy as one of their options is the cost. Many assume that the cost to declare bankruptcy is too high and will simply add to their current financial problems. After all, if a consumer is struggling to pay off current debts as it is, how will adding one more fee help the situation?
Keep in mind that the fees for declaring bankruptcy are actually pretty low. Chapter seven bankruptcy costs $274, and chapter 13 is only $189 at the time of this writing. This may seem expensive for those who are struggling with debt problems, but if your case is successful you will be getting significant relief from your financial problems.
A successful chapter seven bankruptcy will eliminate your debt, while a chapter 13 is only designed to create a payment plan that you’ll have to follow for 3 to 5 years.
Either way, declaring personal bankruptcy can be a lifeline for those in serious financial difficulties. Obviously it would be nice to completely wipe out your debts, but sometimes even a simple agreement with your creditors is good enough to get you back on track. This can be the case when you’re trying to catch up on your mortgage payments and don’t wish to go into foreclosure.
When you consider what you’re trying to achieve with bankruptcy, the fees for filing your case do not seem so great. However, as with most legal issues, the real cost usually comes with your lawyer fees. Your legal fees can certainly add up, and the recent bankruptcy law changes makes things more complex and gives your lawyers more work to do.
So how are you supposed to pay for all of this? Well, you should keep in mind that if your application is successful, you may be able to wipe out most, if not all, of your debt. This should make it much easier to take care of your legal costs.
In fact, you receive some relief as soon as you file your application for bankruptcy. Your creditors are not allowed to contact you until your case is resolved, and this gives you at least a temporary break from your bills.
Always remember that you need to find a good bankruptcy lawyer to help you through this, and don’t try to go through the process on your own. However, it is a good idea to try and learn as much as possible about your situation before talking to an attorney.