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Do you have to pay for bankruptcy if you qualify?

On Behalf of | Aug 20, 2020 | Chapter 7 Bankruptcy |

Bankruptcy is an interesting process. When you file for it, you can protect your assets against collections and even stop things like wage garnishments or foreclosures. You may go through credit counseling and get help eliminating your unsecured debts. Sometimes, secured debts can be restructured to make it easier for you to pay them back.

Bankruptcies for consumers come in two forms, Chapter 7 and Chapter 13. Chapter 7 bankruptcy is what most people think of when they think of bankruptcy, and can involve liquidating some assets to pay back debt. With Chapter 7 bankruptcies, you show that you cannot afford to pay back what you owe or that your debt is overwhelming in comparison to your income for full relief.

To qualify for Chapter 7 bankruptcy, you will need to make sure you identify all your creditors for the court. Show the court your liabilities and assets, so the judge can see what you have that can be liquidated versus the exempt assets and debts. You should also include your current schedule of expenditures, like a list including rent, utility bills and other expenses.

Does it cost anything to start a bankruptcy case?

Yes. The courts do charge $245 in case filing fees. There are also administrative fees of $75 and a trustee fee of $15. Sometimes, debtors can pay in installments if it isn’t possible to pay at the time of filing. If you have an income less than 150% of the poverty level, then you may end up having the fees waived. These costs are in addition to the fees that your attorney may charge.

Your attorney can talk to you more about cost if you intend to file for bankruptcy — and help you learn more about your options.