How Much Does Bankruptcy Cost?

You are probably in serious financial drama if you are asking a question such as "how much does bankruptcy cost? While it is fairly simple to learn the actual filing fees for bankruptcy cases, there are other factors to consider as you ponder this question.

Most people who declare personal insolvency ask for debt forgiveness under Chapter 7 or a partial debt repayment plan under Chapter 13. As of 2013, $306 was the basic filing fee for a Chapter 7 case; it cost $281 to request a court-supervised debt repayment plan under Chapter 13. If you are in serious financial trouble, a judge may allow you to pay the fee in installments or even approve a fee waiver.

But consider your future borrowing power when asking the question of "how much does bankruptcy cost? You will have problems getting all types of credit, especially right after a judge approves your case. Also, you will pay much higher interest rates than a consumer who did not file bankruptcy. If you do not plan to buy a home in the next 7 to 10 years, increased interest rates probably will not cripple you financially. But if you plan to get a mortgage, you could potentially pay tens of thousands dollars more than someone who did not file bankruptcy. Exceptions may apply if you are a veteran or willing to buy a home through the United States Department of Housing and Urban Development.

Also, consider the cost of hiring an attorney. You do not have to have legal help to file personal bankruptcy, but officials highly recommend you do so. Without legal assistance, you risk messing up your paperwork and losing all the potential benefits of bankruptcy. In most cases, a bankruptcy lawyer can cost hundreds of dollars; fees around $1,000 to $2,000 are not uncommon. However, a good lawyer can save you many thousands of dollars and may be able to help you protect more of your assets such as real estate equity. If you are seriously disabled and owe government-funded student loans, you probably need a lawyer if you hope to get out of repaying those obligations. Again, in this case hiring legal help will potentially save you much more money than your initial investment. Most lawyers will take payments, but will not actually file the bankruptcy paperwork until you finish repaying them. They also cannot legally take checks, credit cards, or debit cards since you are filing bankruptcy.

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