The cost of bankruptcy will hit you in a number of different ways. There is the actual cost of filing for bankruptcy, the legal and counseling fees that you will probably have to pay and the increased cost of credit and insurance premiums over an extended period after your bankruptcy.
Cost of Bankruptcy - Filing Costs
The filing costs for bankruptcy are actually quite small and are as follows:
Chapter 7 – $299
Chapter 13 – $274
Cost of Bankruptcy – Legal and Counseling Costs
You will probably need to assistance of a attorney to file for bankruptcy. There are also new regulations that require you to attend credit counseling before declaring bankruptcy. Typical costs for these are going to be in the region of $700-$2000
Getting Credit and Insurance After Bankruptcy
Your bankruptcy will stay on your records for 10 years (or 7 years for chapter 13). During this period you will find it much more expensive to get credit, including mortgages (for chapter 7 bankruptcy you will probably be unable to get a mortgage at all for 2 years). In the current climate you might find it hard to get a mortgage at all. Insurance companies will use credit records, and consider people that have been bankrupt a higher risk. This will increase your premiums.
The Emotional Cost
There is much less stigma attached to bankruptcy than there used to be, but it’s still there. The effect on your family and relationships might be significant, you are certainly going to find out how strong your relationship is. If you have been hiding debts from your family then the double shock of also declaring bankruptcy will push a lot of marriages to breaking point.
Tags: cost of bankruptcy, Debt Advice
How to keep control of your debts, reduce them, or even avoid getting into debt in the first place might be one of the most important financial lessons you ever learn. Having excessive debt can damage your health and relationships and will keep you poor, so it is important to know how to keep it under control.
Debt Control – The Basics
You cannot control your debts if you don’t know what they are. Record all of your debts in one place with amount outstanding, repayment amount, interest rate, and time to repay. You can use this information to help you to decide which of your debts to pay off first.
You cannot plan to pay off your debt if you don’t understand how much you earn and how much you spend each month. Use your bank statement to write down a complete list of everything you earn and spend in a month. This will help you to see if you are able to pay off your debt on your current income.
If you feel that your debt situation is getting out of control then seek the advice of a reputable debt organization, preferably a charity or a company that gives initial consultations free. One thing that you must not do if you are in this situation is nothing (and another is taking on more debt). Delay can make things much worse and make the job of resolving your debt situation far worse when you eventually have to face it (which you inevitably will).
Tags: Debt Advice, debt control
If you are considering bankruptcy in the USA you might wonder what sort of bankruptcy is most suitable for you, and what the different bankruptcy types mean. There are many different types of bankruptcy, but for people (not businesses) there are really only two types of bankruptcies that you need to consider. These different types are named after the chapters in the original bankruptcy law.
Bankruptcy Types – Chapter 7
This is full bankruptcy for the most serious debt situations where the debtor has no or little income. Recent legislation restricted access to this form of bankruptcy as it was felt that too many people were taking advantage of it to avoid their debts. Some of the new requirements include attending credit counseling and the need for additional legal advice. This type of bankruptcy stays on your credit file for 10 years and usually you will not be able to get a mortgage for 2 years.
Bankruptcy Types – Chapter 13
This bankruptcy type is for people that have a serious debt problem but have earnings and can afford to pay something towards paying off their debt. In this case the debtor will pay an agreed amount into their bankruptcy over a period of years. At the end of this period all of their debts will be written off. This form of bankruptcy stays on your credit file for 7 years. If you are a UK rather than a US resident, this type of bankruptcy is similar to an individual voluntary arrangement.
Common Features
Mortgages are not included in a bankruptcy and whether the debtor gets to keep their home or not will depend on state-by-state regulations regarding exemption of the family home from the bankruptcy estate,
Tags: Bankruptcy, bankruptcy types, Debt Advice
