Filing for bankruptcy is never an easy decision to make. When creditors are calling and bills are left unpaid, it's hard to imagine a way to pay for an attorney and legal fees on top of everything else. However, the expenses of filing for bankruptcy may be less than the growing costs of not filing. In order to make the best decision for your circumstances, take a look at the cost of filing bankruptcy versus the costs of not filing.
First, is filing bankruptcy necessary?
The decision to file for bankruptcy is personal and dependent upon your situation. Speaking with a knowledgeable attorney can help you answer a few questions before you make your decision.
•· How will the business I own be affected if I personally file bankruptcy?
•· How will my property be affected by filing for bankruptcy?
•· Will I lose my vehicles by filing?
•· When should I file?
Cost of filing bankruptcy
One of the biggest stumbling blocks for a person (or business) going through the bankruptcy process is the additional expenses. The expenses include:
•· Attorney fees: The fees vary by state and by case. The more complex your case is, the higher your fee will be.
•· Filing fees: The average filing fee in 2016 is $335.
•· Bankruptcy counseling course fees: $60 or less
•· Litigation fees , if necessary
Ways to save money
Attorneys fees for filing Chapter 7 bankruptcy vary greatly from city to city and even withing communities. The national average is currently $1450, but some law firms will offer significantly lower rates, based on the amount of time required to handle the case. Some attorneys offer reduced fees for senior citizens on fixed incomes, people with low assets, students in certain circumstances, and those who receive disability payments.
The risky cost of not filing for bankruptcy
Filing for bankruptcy is not free. However, not filing can cost you more money in the long run. When you file for bankruptcy, debts (i.e. a credit card) are removed. In addition, a bankruptcy will protect your non-exempt property which means your home cannot be used to pay creditors. If you choose to not file, then your debts are not removed plus there is a chance your home, car(s), and other assets can be taken and used to pay creditors. Your home is at risk of foreclosure, and your cars are at risk of being repossessed.
Another benefit of filing bankruptcy is that utility companies are prohibited from taking action (i.e. turning off your power) because you have outstanding bills. On the other hand, if you don't file for bankruptcy, you do not gain this protection, and thus you are at risk for having your utilities shut off due to unpaid bills.
Filing for bankruptcy is not a decision to take lightly. Even though debts are forgiven, there are other side effects including having the bankruptcy show on your credit history for ten years. Filing for bankruptcy is not the best solution for everyone, though. For example, if you have only a small amount of debt, it may be possible to work with collections. However, for a lot of individuals who find themselves contemplating bankruptcy, will find that the costs of filing bankruptcy far outweigh the burdensome, growing costs of neglecting to file.
If you are contemplating filing for bankruptcy, if you have a complicated situation, or if you are at risking of losing several assets, contact an attorney well-versed in bankruptcy law to ensure that your rights are protected.