If you are down in debt and cannot figure out how to get out of it, sometimes filing for bankruptcy is a good idea. Not only could it buy you time to pay off your debts, but in certain cases, it could also have your debts written off altogether.

However, before you decide to file for bankruptcy, doing your research is extremely necessary. This is because filing for bankruptcy could end up costing you more than you could even think.

The main reason for a bankrupt person shelling out more money is lawyers’ fees. Although this step comes, later on, it is quite an expensive step. The process begins with filing for bankruptcy, for which you need to shell out fees. The filing fees could start at about $240.

Before we go further, you should know about the two categories, which are an important aspect while filing for bankruptcy. The costs of these two categories vary.

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Chapter 7

This is the first type of bankruptcy, where a person’s debts can be wiped out. However, only people who have an income that is below the median of their state can apply for this kind of bankruptcy. The filing fees for bankruptcy under chapter 7 is around $245.

Chapter 13

This is the type of bankruptcy for people who have a regular source of income. It extends for a period of about three to five years and allows those who have filed for it to keep their homes and other assets. The filing fees for bankruptcy under chapter 13 is around $235.

After the filing part of it is done, the fees for credit counseling as well as a credit education course then comes into the picture. Although these come at a nominal fee, these could also add to your expenses. If you do your homework well enough, you could also be lucky to avail of these services free of cost from a non-profit organization.

If you have filed for bankruptcy under chapter 13, then a commission of around 10 percent has to be paid to the trustee who has been appointed to make the repayments.

After this, the lawyer’s fees is one expense that would have to be undertaken. The fees for your lawyer who assists you in your bankruptcy case varies from one place to another. The cost of your attorney’s fees could also vary depending on the amount of assistance they provide you along with their expertise and the complexity of your case. An attorney’s fees can start at about $800 and can go up to as high as $2000.

While this is just the monetary part of it, filing for bankruptcy could also have other costs and repercussions involved. The other aspect could include your credit report that could reflect bankruptcy for the next 10 years, which could create a problem in case you need a loan or a new job.

Although bankruptcy may seem like an easy way out if you are sinking in debt, weighing the pros and cons of doing so before you take any step forward would be a wise idea.

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