Introduction:
Bankruptcy can be very complicated and it is never easy to go through, but, in most cases, it is crucial and debt-relieving procedure for those people who are in aggravating and almost unbearable debt situation. It is one of the important decisions you will have to take if you want to file for bankruptcy as to what chapter that you want to be under.
In the United States, chapter 7 obligations discharge is the most common option because it has the power of debt discharge. Moreover, it is essential to know the costs involved in the process of Chapter 7 bankruptcy to make a well-informed decision regarding your financial future.
Understanding Chapter 7 Bankruptcy:
Chapter 7 bankruptcy, commonly called “liquidation bankruptcy”, refers to the procedure of selling the debtor’s property, nonexempt of course, to repay his creditors. Unlike Chapter 13 bankruptcy which is based on repayment plan, Chapter 7 normally releases most unsecured debts, giving the debtor a new start.
Qualifying for Chapter 7:
Before considering the expenses of Chapter 7 bankruptcy, it is critical to check if you are eligible for this type of bankruptcy. Eligibility is ascertained through means test, which is based on your disposable income together with your expenses to establish whether you could clear your dues.
If your income is less than the median income for the state or you qualify for Chapter 7 bankruptcy under the means test, you are considered eligible to file for Chapter 7 bankruptcy.
Legal Fees:
Among the major expenses of filing Chapter 7 bankruptcy, attorney fees would be the first foremost. The best idea to handle bankruptcy is to get the services of a bankruptcy attorney who will guide you through the complex legal matters involved. As a legal matter, the cost of legal representation may differ depending on the intricacy of your case and the advocate’s expertise.
Typically, it will range from $1,500 to $3,500 for Chapter 7 bankruptcy attorney’s fees.
Court Filing Fees:
Another expense of Chapter 7 bankruptcy is the court filing fees. Currently in 2024, the filing fee for the Bankruptcy Law Chapter 7 in the US is $338.
The filing fee due to the bankruptcy court is paid by checking appropriately in the filing documents when you file your case. Nevertheless, those with low income ability may meet qualifications for a fee waiver or installment payments.
Credit Counseling and Debtor Education: The initial move of people who approach for Chapter 7 bankruptcy will be to take a credit counseling course from the organization that is under the approved agency roster. Usually, such counseling fee is $50, but it can be waived for people who cannot afford it.
Furthermore, consumers have to attend a debtor education course following their application, and it might take around $50 to $100.
Trustee Fees: In Chapter 7 bankruptcy, the trustee is appointed to manage the liquidation and distribute assets to creditors proportionally. The remuneration of trustees mirrors what is earned in any other job as their services are usually remunerated by the proceeds of sales during bankruptcy.
The specific percentage of trustee fees may vary from one case to another and can be based on many factors that may make the case more or less complex.
Conclusion:
Chapter 7 bankruptcy filing may be like an umbrella, in which someone suffering from annoying debt condition is provided with the much-needed relief. But remember, you should be informed about the costs you will incur and carefully evaluate the opportunities available to enable you to make an informed decision.
By seeking help of a bankruptcy lawyer and conducting a thorough research to learn about the process, you can make a well-considered decision on whether filing a Chapter 7 bankruptcy is the appropriate way forward for your given financial condition.
John E. Snyder
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