Declaring bankruptcy can be a burden on anyone, and while it can cause a financial headache, youíre also going to find that itís going to cause stress, confusion and more. If youíre declaring bankruptcy, thereís a good chance that youíre going to be doing it for the first time. To make it easier, I wanted to break down the costs, as well as reasons why you should do it, as well as reasons on why you shouldnít do it.
The costs of bankruptcy
Filing bankruptcy isnít cheap and youíre going to find that if you donít have the money up front, many attorneys just wonít work with you. You will want to think about their side for a second. Would you really work for free? For starters, youíre going to have to file with your state. There are two types of bankruptcies, which are Chapter 7 and Chapter 13. Your Chapter 7 bankruptcies are going to cost you around $300 to file while your Chapter 13ís may be a pinch cheaper.
Now, filing the bankruptcy with your state is just the beginning. After this, youíre going to have to set out to get an attorney. From doing my research, the average attorney is going to run you anywhere from $500 to as much as $2,500 to file the paperwork as well as consult with you. The more time you generally spend with an attorney, the more youíre going to have to pay.
How to save on your bankruptcy
Thereís a good chance that you may not even have to file your bankruptcy papers with courts. What you will find out is that thereís a good chance that you may not even have to file! I was watching a documentary back in the day where a female had proclaimed that she wanted to file bankruptcy. The sad thing is that she only had $14,000 in debt. While it may sound like a lot of money, there are so many things that you can do to get out of it. Consult with a local church, or nonprofit organization in your area. These people will be more than happy to help you with your financial needs at no cost!
How do I know if I should file?
This is probably the most popular question asked online, as well as in person. Every situation is going to be different, and while you may feel that you should declare, there is a simple formula that you can follow. What youíre going to want to do is write down what you make on an annual basis (take home). You will then want to tally up all of your debts that donít include your mortgage (if you have one). If your debts are more than 3 years worth of your annual take home, you probably should highly consider it. If itís anything lower than this, you will want to create a plan so that you can work things out.
The real costs in the long run
If you do decide that you want to file, there are going to be many hard obstacles in the years to come. You will want to kiss any home loans goodbye, as well as any other method of loans for at least the next 7 years. Also, keep in mind that many employers will check credit reports as well. Sadly, if you
have a bankruptcy, they wonít hire you. While you will have $0 in debt, is it really worth just taking the easy way out? There are so many methods that you can take to help you drive down your debts without having to file. As I mentioned above, be sure to check with some local nonprofits to see what they can do for you.
This article was written by Elizabeth Cutten, who helps run www.findsecuredcards.com, a resource center helping consumers rebuild their credit with credit cards as well as provide them with many unique tips, tricks and more.