When you are in debt and considering your options, bankruptcy may stand out from the rest for its ability to significantly reduce your debt. Filing for bankruptcy comes with many benefits, from stopping creditor harassment to allowing you to keep certain assets. It gives you the fresh financial start you need with the opportunity to rebuild better credit quickly.
However, the process is not free simply because you are running low on funds. Eliminating debt costs money, and knowing how much can help you prepare for it.
You must file for bankruptcy at a federal bankruptcy court near you, which charges you fees of over $300. Whether you file for Chapter 7 or Chapter 13 will determine the exact amount. You can apply for a fee waiver or payment plan if you meet the requirements. Other actions, such as filing an appeal, also come with court fees.
Another expense is attorney fees. Hiring a lawyer may seem unnecessary, but paying for professional help to do it right the first time can save you from paying avoidable penalties later or from the court dismissing your bankruptcy case altogether.
Other costs to consider
In addition to the upfront costs, you need to factor in other uses of your time and money. You may need to take off from work to appear at court and ensure you have transportation. The bankruptcy process also requires you to attend financial courses before and after filing. Gathering information and speaking with your lawyer also take time. It can be wise to begin better financial practices now to help you pay for your bankruptcy.
Do not let the cost deter you from going through with filing. The price you will have to pay is little compared to the long-term cost of staying in debt, falling prey to a debt-relief scam or losing assets you could retain through bankruptcy.