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?
Well, first we should take a look at the actual cost of filing bankruptcy with the court. The court filing fee for chapter 7 bankruptcy is $274, while the fee for chapter 13 filing is $189. This may seem like a steep price to pay for someone who is already in serious financial straits, but the numbers are much more reasonable when you consider what you’re getting in return.
In case you’re wondering about the difference, chapter seven bankruptcy is aimed at wiping out your debt, while chapter 13 gives you a payment plan for several years.
Personal bankruptcy can be a lifeline if you’re drowning in credit card debt (or any other kind of financial obligations for that matter). Chapter seven can help you wipe out your credit card bills if you are running out of options, and a chapter 13 bankruptcy can give you a payment plan to catch up on your mortgage.
If you think about what you’re getting in exchange for bankruptcy, the fees themselves should not seem like a big obstacle. You do have to consider your legal costs, which are in addition to the bankruptcy filing fees. Don’t even think about trying to declare bankruptcy on your own, especially with the new bankruptcy law that has made things more difficult for both lawyers and their clients.
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.
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.
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