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How should you deal with the costs of declaring bankruptcy?
If your financial circumstances are bad enough, you may be considering bankruptcy as a way to solve your overwhelming credit card debt. However, many people are concerned about having to pay for the bankruptcy process itself. If you already have problems paying your current obligations, where are you going to find the funds to cover the cost of bankruptcy?
When you consider what you’re getting in exchange for bankruptcy, the fees are not so great. At the time of this writing, chapter seven bankruptcy costs $274, and chapter 13 costs $189. Of course, these are only the fees that you have to pay to the court, and this does not include your legal fees.
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.
But how do you find the money to pay for these costs if you are already struggling with your debt? It starts to feel much easier when you remember that your debts will be wiped out if you’re bankruptcy case is successful. If you don’t have to worry about your previous bills, then you will have a much easier time paying for your legal bills.
In fact, as soon as you file your request with the court, you receive an automatic stay which means that no creditor can demand payment from you until your case is resolved. So right away you have freed up some funds which can be redirected to cover legal fees.
You should really avoid trying to declare bankruptcy without the help of a lawyer, since this is a serious financial decision with long-term consequences.
