Bankruptcy laws were created to be a tool for debt relief available for people with financial problems who are insolvent and unable to pay the debts to their creditors. Declaring bankruptcy is as not as easy as it sounds. There are a number of factors to consider. An important thing to note is that one cannot wipe out all debts when a person files for bankruptcy. Certain debts like a student loan, alimony, medical debt, and certain nonexempt debts are not dischargeable after bankruptcy.
While filing for bankruptcy may enable you to have a fresh start, the bankruptcy process can be quite costly, reaching up to $2,000 depending on the type of bankruptcy you would avail.
Kinds of Bankruptcy fees
For bankruptcy filing, there are two or three main costs:
First, is the filing fee paid directly to the bankruptcy court amounting to:
- $335 if you’re filing bankruptcy for a Chapter 7
- $1,717 for Chapter 11
- $275 for Chapter 12
- $310 for Chapter 13.
The second fee would be for credit counseling courses. According to the bankruptcy law, you must take credit counseling from government-approved credit counseling agencies before filing and after you have filed for bankruptcy. It is available online, through phone and even in person if you feel like you will have a much better experience speaking face-to-face. and the price range is $25-$35 per course depending on your credit counselor where you take the course from. The class usually lasts one to two hours and upon completing the course, you will be given a certificate valid for 180 days.
The third fee would be attorney fees. While any person can file for bankruptcy without a lawyer, you will be responsible for fully understanding the law. For many people, having a bankruptcy lawyer will be beneficial in order to take full advantage of their circumstances and have additional bankruptcy protection. Some bankruptcy lawyers have fixed rates that cover the whole case while for others, the total amount would depend on the severity of the case including other factors.
Fee waiver and Fee installments
The general rule is that you pay the filing fee upon the petition for a bankruptcy case. However, under certain circumstances, you can apply to pay the bankruptcy court in monthly installments or even waive the fee completely.
- Paying the fee in installments
In order to apply to pay in installments, you need to file Form 103A stating that you are not able to pay your fees as a whole, except through installments, while proposing a payment plan schedule. The payment schedule must not exceed four payments with the final installment being made less than 120 days after filing the bankruptcy petition.
Filing fees may be waived but you need to complete Form 103B and in case the judge will ask questions, you might need to go to court though usually, the application is approved without requiring appearance. Those who qualify for a fee waiver should:
- Be incapable of paying in installments
- Have an income 150% below the poverty line
- Fee waiver and installment payments in Chapter 13
Those who apply for Chapter 13 are not qualified for a filing fee waiver and installment payments because, with Chapter 13, you must have enough disposable income for the repayment plan spanning three to five years.
In case when your income if 150% below the poverty line, some credit counselors will waive your fees.
Completing the Bankruptcy Forms
Under the bankruptcy code, there are several types of bankruptcy that a person may avail of. There are official national forms and a local form that needs to be completed prior to filing bankruptcy. The forms are available online or you can get your hardcopy by going to a court’s self-help center. If you are availing the services of bankruptcy lawyers, they can help you prepare the forms ready for filing.
Are you considering bankruptcy? It will be wise to work with a lawyer and seek legal advice.
The bankruptcy process may be very complicated. Having a bankruptcy lawyer would be greatly beneficial to you since an experienced bankruptcy attorney will help you list all potential liabilities and possible courses of action. Your bankruptcy lawyer may also help you preserve as much property possible while acquiring debt relief. We at Northwest Debt Relief Law Firm have the technical knowledge and experience in bankruptcy cases. If you are considering to file for bankruptcy but you are not sure of what form of bankruptcy to avail or maybe you’re just worried about forthcoming liabilities, our bankruptcy attorneys may help clear the air for you especially on terms which may be mind-boggling for you such as bankruptcy exemptions, debt settlement, reorganization plan, insolvencies, mortgage payments, debt management and many more. Do not hesitate to ask for advice. Call us at Northwest Debt Relief Law Firm now for an initial free legal consultation.