How Much Does Bankruptcy Cost?
Bankruptcy is a federal court proceeding to help private citizens and businesses eliminated their debts or repay it under the supervision of a bankruptcy court. It is programmed in such a way that you can get a fresh start and start building a new and good credit record. Under Chapter 7, bankruptcy is generally described as ‘liquidation’ while Chapter 13 describes it as ‘reorganization’. Before filing bankruptcy, you may have asked the question, “How much does bankruptcy cost?” Here is an article that will help you give you a background on the fees that you are expected to pay.
Having a bankruptcy can be very hurtful on your credit record. With the increasing costs of commodities nowadays and a raging unemployment at hand, a lot of people had been considering bankruptcy as an option. Before filing one, make sure that you check for other options like a Debt Consolidation of loan modification program. But when bankruptcy is inevitable, make sure to prepare your pocket with the fees that come along. So how much does bankruptcy cost?
- Chapter 13. Also known as the “Wage Earner’s Plan”, this type of bankruptcy will help you discharge your priority, secured and unsecured assets in minimum period of 5 years. As a petitioner, you are expected to still pay all your creditors. The trustee, on the other hand, acts as an intermediary between the claimants and debtor. There is a $39 administrative fee and a filing fee of about $235 to $250 by the court. The bankruptcy court also mandates how the payment is to be made in a maximum of 4 installments within a period of 120 days.
- Chapter 11. This type of bankruptcy is specifically designed for companies who are restructuring. The bankruptcy court usually charges $1,000 filing fee from the petitioner and there is also an administrative fee of $39. Aside from these fees, the debtor will also be paying a quarterly fee for the trustee until the bankruptcy is dismissed. The trustee also imposes certain restrictions on the company (like sole proprietorship, a corporation or partnership) when it comes to monthly financial reports.
- Chapter 7. In the case of Chapter 7 bankruptcy, a certain debtor’s asset is classified as either exempt or non-exempt. This is for the purpose of satisfying their creditor’s claims. A trustee liquidates the non-exempt assets by selling them to the market in a way that would assuage their creditor’s claims. The bankruptcy court usually charges a $245 filing fee, $39 administrative fee and a $15 trustee surcharge fee. You may have the filing fee in installments with a permit from the court. They can be paid in 4 or less installments and within a matter of 120 days as well except under worst circumstances wherein they only allow a 60-day grace period. The administrative and miscellaneous fees can also be paid in installments. There may be an exemption if your income is less than 150% of the poverty line. Couples are usually required to pay all the fees once. Bankruptcy price also vary in every state.
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