How much will bankruptcy cost?
If the court approves your petition for relief through bankruptcy you get to pay off creditors, get some debt relief and move forward with a fresh financial start. But at what cost? There is a financial cost that comes with the bankruptcy process and also the initial impact to your credit score. But is the cost worth it? In some cases, the answer is yes. The following will delve into these expenses and help you get the information you need to decide if the cost is worth it in your situation.
Why is there a cost to bankruptcy?
It may seem counterintuitive that the process used to wipe out debt would come at a cost. The fact is the process requires administrative work and court fees. These average a couple hundred dollars for Chapter 7 and Chapter 13 petitions for bankruptcy relief.
What is the cost of bankruptcy?
The court fees can vary depending on the details of the filing but are generally less for individuals compared to businesses going through the process. The most recent filing fees are $338 for a Chapter 7 and $313 for a Chapter 13 but each additional court motion leads to extra fees.
Are there any other fees?
Many factors can impact the cost like whether you are going through this alone or as a married couple, have multiple sources of income or unusual assets and the number and type of creditors. In some cases, it is wise to hire an attorney to help navigate the process. Attorneys generally serve three functions during the bankruptcy process. They help file the petition with the court, get through the requirements, and provide representation if you need to go to court.
Although this also comes with a cost, the expenses may end up saving you money. Examples of how can include:
- Getting it right the first time. An attorney is more likely to help you choose the right type of bankruptcy and gather all necessary paperwork, better ensuring court approval. The vast majority of those who try to go it alone fail — only 1.4% of those who filed for Chapter 13 bankruptcy got discharge or were able to resolve their issue and get debt forgiveness.
- Maximize the benefits. A bankruptcy lawyer is also more likely to know exactly what you can discharge and make sure you make the most of your bankruptcy.
- Future success. This can increase the odds of a fresh start once the bankruptcy process is complete allowing you to start rebuilding your credit and move on.
Those who are going through the process can see if paying in installments is an option. This can translate to smaller, more manageable bills and help to build towards future success, as making payments on time will work towards rebuilding your credit score.