By Dana Berberich
WWR Article Summary (tl;dr) There are several types of bankruptcies. Dana Berberich of Bankrate.com explains how each one works and what you will need to do if you choose to file.
Bankruptcy is a term for a federal court procedure that allows consumers and businesses to rid themselves of most types of debt and/or to repay creditors.
There are different types of bankruptcies, and they are categorized as either liquidations or reorganizations.
Filing for bankruptcy will cost you $275 to $335. There are other fees that may apply. They can be as little as 10 cents for photocopies or as much as $298 to file an appeal.
If you decide to work with an attorney, the cost will be much higher. The average cost in the U.S. for a bankruptcy attorney is $1,250, payable in advance.
If you are able to prove that paying filing fees would cause significant financial hardship, most courts will allow you to pay fees in installments instead of a lump sum.
Here are the 2017 costs for filing the most common types of personal bankruptcy:
-Chapter 7: $335
Chapter 7 is known as straight bankruptcy, complete bankruptcy or liquidation. It is the most common type of individual bankruptcy. When you file Chapter 7, a trustee collects your non-exempt assets to sell them. The trustee then distributes the money to your creditors.
You should consider Chapter 7 if you have absolutely no way of paying back your debts or if creditors are beginning to take court action against you.
Do not ignore billing statements from your creditors, though. Let them know that you intend to file for bankruptcy in case they are in the process of repossessing your car, foreclosing on your home, garnishing your wages or taking some other action to recoup their losses.