Financial issues can arise at any time, perhaps suddenly from an expensive accident lead to unexpected medical bills or built up from years of credit card debt. Before you know it, your bills are stacking up and it seems like you’re never going to get out from under a mountain of debt. How are you supposed to start saving for the future with your debts looming over you?
Filing for bankruptcy may be your best option at tackling your debt. Bankruptcy helps you by canceling most of your debts, allowing you to get a fresh start and begin putting money aside for the future. Your credit score may suffer for a while, but if there is no other way to get rid of your debts, it might be your best shot at a clear financial future.
That being said, declaring bankruptcy is not as simple as it may sound. You will need to understand the costs associated with filing for bankruptcy before you start the process.
Bankruptcy filing fees and costs
We’ll start with the good news: no matter what state you’re in, your court filing fees will be the same. Depending on the form of bankruptcy you are filing for, you should expect these costs:
- Chapter 7 bankruptcy discharges a majority of your debts with the exception of a few, like student loans, child support and spousal maintenance. This form of bankruptcy has a filing fee of $335.
- Chapter 13 bankruptcy reorganizes your debts and allows you to pay a portion of your debt through a structured payment plan. This form of bankruptcy has a filing fee of $310.
If you cannot afford the filing fee, you can petition the court to pay the fee in installments.
Aside from the filing costs, you will have to take two educational courses before and after you file that may come at a cost. The courses may be done online or by telephone. Before you file, you will take a credit counseling course, and then you must take a debtor education course during your bankruptcy case and before your debts are discharged. Depending on the area you are in, you may able to receive this counseling for free, but costs average $15-$40 per course. Before completing this counseling, make sure that it is accredited and registered through the bankruptcy court. Your bankruptcy attorney will provide you with a list of approved companies.
One of the biggest and most important costs of bankruptcy are your attorney fees. Getting your debt discharged without the assistance of a lawyer is incredibly difficult, if not impossible, especially if your case is complicated. Factors like multiple sources of income, business bankruptcy, a greater than average income or having non-dischargeable debts require the assistance of a lawyer to navigate. Get an attorney who is willing to work with your budget or asset protection needs while understanding a lawyer is an investment that will pay off in the end.
Further costs of bankruptcy
Unfortunately, the costs of bankruptcy aren’t over once you’ve filed. If you’ve filed for Chapter 7 bankruptcy, it may come with losing some of your property, though most people don’t lose any property. In Chapter 13 bankruptcy, you are not at risk of losing assets since are paying a portion of your debts. When filing, you will need to be transparent with everything you own, from real estate, vehicles, personal items or any other assets that you own. These are necessary in determining the value of your estate. Being untruthful about the value of your assets will result in your bankruptcy being denied.
In Chapter 7 bankruptcy, some of your assets may be exempt from being taken away when filing for bankruptcy. This includes:
- The home you live in
- Your primary vehicle
The specific amount that is exempt can vary depending on the state you live in. For example, in Missouri you can exempt $15,000 of the equity in the real estate where you live and $3,000 in equity in an automobile. Check with your legal counsel to calculate exactly how many of your assets are exempt.
When the time comes to get out of debt, contact Reynolds & Gold.
Let us help you get you the outcome you deserve for your bankruptcy.