The personal bankruptcy process is designed to relieve the pressure on those who are unable to meet their financial obligations. If you considering the advantages of declaring bankruptcy and wondering how much it is to go bankrupt, you may be surprised to learn that it can cost about $2000 for a simple bankruptcy petition.
Going bankrupt is not cheap, with the basic filing fee costing $299 for a Chapter 7 bankruptcy and $274 for a Chapter 13 bankruptcy. If this exceeds your budget and you are unable to pay in-full at the time of filing, you may be able to pay the fee in installments over the course of four to six months. Contact the clerk at your local bankruptcy court to obtain the correct forms in order to make this application. If you are truly unable to pay the case fees, even in installments over a period of months, you may be able to get them waived by the court. In order to do this you must submit a waiver of the filing fee to the clerk at the bankruptcy court. If your income is less than 150 percent of the official poverty line, the judge will probably grant your request and you will not have to pay the case filing fee of approximately $300.
In addition to the basic case filing fee, individuals must also pay for their financial education courses. In most states it is now mandatory to complete a credit counseling course prior to the filing of the personal bankruptcy petition in order that they may include the certificate of completion along with the necessary bankruptcy filing forms. This course includes assistance in organizing financial documents, preparing an inventory of assets and debts, and writing a repayment plan if you have opted to file under Chapter 13. The pre-discharge financial education course that must be taken within 45 days of filing the initial personal bankruptcy petition includes such topics as planning a household budget, managing credit cards, and applying for loans. Once you have completed the course, it is your responsibility to submit the certificates of completion to the court-appointed trustee in charge of your case. If you do not complete the course within the mandatory period, the judge may declare a denial of discharge. These courses can both be taken in-person, over the phone, or online and take only a few hours to complete. The cost ranges from $15 to $75 and if you are unable to pay, you must apply to the court to have the fees waived; however, as will the waiving of the case fees, this will only be possible if your income is less than 150 percent of the official poverty line.
Additional costs payable to the court include filing an amendment to the debtor’s schedule of creditors or lists of creditors ($26), converting from one chapter to another ($25), reopening a Chapter 7 filing ($245), or reopening a Chapter 13 ($235).
There are other costs associated with the filing of a personal bankruptcy petition but these are optional and your decision to pay for them will obviously increase the overall cost. You will not require a lawyer unless your case is especially difficult, involving complex property ownership or uncooperative creditors. If that is the case, or you simply do not feel comfortable representing yourself in bankruptcy court, you may decide to hire a qualified bankruptcy attorney. Keep in mind that doing so will cost anywhere from $1,000 – $2,000 but the legal advice you receive will help you get the most out of your bankruptcy filing. Although discount lawyers are available for about half the price, make sure to shop around for one that you feel comfortable working with and who you think will best represent you in court.
Bankruptcy Petition Preparers can also be contracted to prepare your documentation for filing. They are not allowed to offer legal advice but can ensure that all the forms are filled in correctly. BPPs are not allowed to charge more than $150 for the full service of completing the forms and any photocopying, postage, telephoning, etc.
How much it is to go bankrupt mainly depends on whether you opt to take advantage of the services of a qualified bankruptcy attorney. Choosing to represent yourself in court will result in a much cheaper bankruptcy process, but if that is even more than you can afford you might be granted permission to pay the case fees in installments, or even have them waived.
To learn if you quality for bankruptcy, please fill out our free bankruptcy evaluation.