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The Cost of Bankruptcy

How am I going to pay for this?

by Adam Mack, J.D.

It’s an apparent paradox: the people who most need to file bankruptcy don’t have money to burn. The reality, though, is that the vast majority of people who have asked me about bankruptcy have been able to file. This is because one of the two major goals of bankruptcy is to give people a fresh start, and both attorneys and the courts recognize the need for a variety of payment options.

Chapter 13
Some people need to file a chapter 13 because they’re above the median income or for other reasons. As we discussed elsewhere, in a chapter 13 the goal is to restructure your debts to make them more affordable. That means chapter 13 filers create with their attorneys a chapter 13 Plan in which they repay a portion of their debts over a period of 3-5 years. It’s very common for people to simply include the attorney’s bankruptcy fee in that plan. The end result is that a person opting for a chapter 13 can file with no money required up front, and often the Plan payments are under $100.

Chapter 7
If you need to file a chapter 7 and can afford to pay upfront, you’ll end up paying a lot less for your bankruptcy since chapter 7 filings cost roughly half of what a chapter 13 does. You won’t have to make ongoing payments, and you won’t have to interact with the courts after your debts are discharged. These things make a chapter 7 the most appealing and affordable form of bankruptcy for many people, despite the upfront cost.

If you truly can’t afford to pay upfront, one alternative available to Kansas filers is a fee-only chapter 13 bankruptcy. What that means is that the only debt you “restructure” is the attorney’s bankruptcy fees, and like the usual Chapter 13 Plan, the monthly payments usually come in at under $100 (sometimes significantly under $100). Also like the usual Chapter 13 plan, the relief from your creditors is immediate, allowing you to begin rebuilding your financial life.

The Most Important Part
If you’re overwhelmed by debt, don’t let a fear of the cost of bankruptcy keep you from financial freedom. Even if none of the payment solutions I’ve discussed in this article will help you, there are other, less-common options available and we’re usually able to work something out. There’s no cost for an initial consultation, and all you’d be out is an hour of your time. Like so many other things in life, when it comes to finding a way to put your debts behind you, it really doesn’t hurt to ask. So contact us today.