The Cost of Filing a Bankruptcy Case

This is a guest post by Wystan North. He has made his mark by
writing on legal issues especially on bankruptcy filing procedures in
different states. The author regularly writes on bankruptcy related issues including:
Ohio bankruptcies, filing Bankruptcy in Ohio, chapter 13 bankruptcy cases and ref=”http://www.bankruptcy7chapter.com/”>chapter 7 bankruptcy cases.

People tend to underestimate the costs of bankruptcy. Because bankruptcy seeks to relieve financial distress, people figure it can’t be that expensive. But a popular saying states the opposite:
bankruptcy is not for the dirt poor. From the actual filing fees to the
possible losses to the debtor, many costs must to be taken
into account.

What Makes Up Bankruptcy Costs?

It’s not uncommon for a debtor to pay thousands of dollars over the course of a bankruptcy filing. But how do these costs add up so fast? It’s usually the result of several factors, such as the filing fees, attorney’s fees, asset and income loss, and occasionally, fees for other third-party services like accountants or tax specialists. There are ways to cut down on costs—for one thing, you can choose to represent yourself instead of hiring a lawyer.

Bankruptcy Chapters

In terms of filing fees, a Chapter 13 bankruptcy case is the cheapest form of consumer bankruptcy. As of 2010, it costs $274 to file a Chapter 13 bankruptcy case, while Chapter 7 costs $299. Outside of consumer bankruptcy, however, the filing fees can also vary. Chapter 11 bankruptcy, a type meant for businesses and corporations, is the most expensive form at $1,039. Chapter 12, which is specifically designed for family farming and fishing businesses, costs $239 to file. All these rates are made up of two parts, an administration fee and a miscellaneous fee, and are adjusted regularly for inflation.

Other Bankruptcy Costs

Some people argue that Chapter 7 is cheaper than Chapter 13 as far as
discharge costs are concerned. More debt is written off in a Chapter 7 bankruptcy, sometimes over 90% of the total. In a Chapter 13 bankruptcy, you can write off a big percentage of your debt and pay off the rest over a three- to five-year period. Of course, the figures vary from one debtor to another as each one has a different debt total.

Bankruptcy Attorney’s Fees

Attorney’s fees also have to be taken into account when filing for
bankruptcy. Lawyers can charge a flat rate or work by the hour, and most are open to payment plans. In some Chapter 13 bankruptcy cases, attorney’s fees can be added to the repayment plan along with the rest of the debt.