It costs money to file a bankruptcy – too expensive?
Posted By admin on May 7, 2012
Economy downturns are still on-going, and there are many average Americans who are considering filing bankruptcy to get relieved out of their current debt situation. Out of various types of bankruptcy options, Chapter 7 is the most popular and common way because it will enable you to wipe out some portions of all of your debt is in the shortest amount of time, even though a certain type of debts are not included in this category.
According to the recent research submitted to the National Bureau of Economic Research, the average cost of filing chapter 7 is more than $1,500. This means that there about half million people who are not able to afford this filing cost each year. Think about it, it costs to file a bankruptcy, and it is not cheap. Therefore they will just use their tax refund money to pay back their current debt situation. Among those fees, there is a $300 court charge, and the rest will usually go to the bankruptcy lawyer. However, if your income is less than 150% of the poverty line, then you might request to have the court fee waived. The judge will typically allow this waiver if you can prove your inability to pay the fee in full or as an installment.
This costly filing process was due to recently introduced Bankruptcy Abuse Prevention and Consumer Protection Act in 2005, which was aiming to reduce the overflow of bankruptcy filing request. The act introduced more requirements to the filing process such as credit counseling, education process and extra paperwork which will in turn bring more fee structures.
There are still hopes for those who can’t afford the high fees by contacting a pro bono lawyer who is willing to provide legal services for free, however only a small percentage of people are actually using this kind of support in reality.