How Much Does Filing Bankruptcy Cost?

April 21, 2012 by  Filed under: Bankruptcy 

How much does filing bankruptcy cost? To answer this question, you first have to define what kind of bankruptcy you are filing. Personal bankruptcy is filed as Chapter 7 bankruptcy. If you do not qualify for Chapter 7 bankruptcy, you may need to file Chapter 13 bankruptcy.

Here’s a look at what you can expect a personal bankruptcy program to cost.

Filing Fee

First, there are the bankruptcy filing fees run about $299 for Chapter 7 bankruptcy. This is a flat fee that is established by the federal government so it is the same no matter where you live. Typically, payment arrangements can be made on this fee.

Attorney Fees

Attorney fees will range anywhere from $700-$2,000. Obviously, you are filing for bankruptcy because you in debt, so many attorneys offer a payment program to make these fees manageable.

Now let’s talk about the other “costs” besides money. According to consumer affairs, here are a few other costs you should consider.

  • You will lose all your credit cards (unless you pay them off before filing.)
  • You may also have to sell some possessions.
  • Any time you apply for a job, an apartment, or credit you may be asked if you ever filed for bankruptcy.
  • A recent bankruptcy makes it nearly impossible to get a mortgage (although you may be able to do so within approximately five years).
  • A bankruptcy stays on your credit report for up to 10 years, which can make it difficult to acquire credit, buy a home or car, get life insurance, or sometimes get a job.
  • Not all debts may be “discharged” in a bankruptcy. Student loans and back taxes (within 3 years) are prime examples of debts that will not be discharged.
  • If you declare bankruptcy, your name will be in court records and may appear in the newspaper.
  • You will have to explain to a judge or trustee how you got into a financial mess and this can be an embarrassing moment for you.
  • It may be a long time before you are able to get credit cards again.

So, you definitely want to look at all of you options before filing bankruptcy. For some people it may be the only choice but for most people, there are other debt reduction programs available that will have less effect on your credit and allow you to keep your assets and start over again.

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