Filing for bankruptcy can help you restructure or pay off your debts, as well as give you more time to pay off what you still owe. That’s why we bring you, How much does it cost to file for bankruptcy in the United States?
While many people think of bankruptcy as a kind of reset, in reality you will still have to pay some money. And it is that the declaration of bankruptcy has its own cost.
The cost will depend in part on the type of bankruptcy you choose and whether you hire an attorney, which, by the way, most people should.
How much does it cost to file for bankruptcy in the United States?
Some costs of bankruptcy would be the following:
- Filing fee, which is approximately $240.
- Credit counseling: Although it’s available for free from nonprofits, it can cost you $79 or more elsewhere.
- Attorney fees: between $700 and $2,000 or more.
- Court fees.
Chapter 7 bankruptcy, also known as liquidation bankruptcy, involves selling your assets to pay off your debts. Chapter 7 is generally for people with incomes below the median for their state. The basic filing fee is 245 dollars.
Even if you don’t have enough cash or assets to pay them off in full, your unsecured debts are canceled during this process. Unsecured debt is that type of debt that is not subject to any asset, that is, it does not have any guarantee.
On the other hand, if you have secured debts, such as a mortgage or car loan, Chapter 7 bankruptcy will not prevent your lender from foreclosing and repossessing those assets.
Keep in mind that no type of bankruptcy will relieve you of paying taxes and other government debt, child support and alimony payments, or student loan debt.
Chapter 13 bankruptcy is the most expensive form of bankruptcy, with a filing fee of $245. Unlike Chapter 7, which involves the sale of most of your belongings, Chapter 13 reorganizes your financial life and your debts, giving you the opportunity to keep certain properties.
Chapter 13 allows people to keep assets like a home and extends the time they have to pay off creditors, usually three to five years.
To be eligible, you must have no more than $419,275 in unsecured debt or $1,257,850 in secured debt.
When you apply, the court will help you work out a payment plan that lasts three to five years. If you make all the payments of this plan, your unsecured debts are cancelled.
As part of the payment plan, you will work with a designated servicer to manage payments to your creditors. The trustee often takes a commission of up to 10%, which adds to the cost of this form of bankruptcy.
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