Whether it's from irresponsible credit card use, a medical issue, or a failed business venture, more than one million people file bankruptcy each year. It's become such common practice that very little of the original stigma remains. In fact, legally absolving your debts could be your biggest and best step towards meaningful retirement savings.
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Bankruptcy attorney Matthew Brennan handles filings for clients in Pennsylvania, here is his advice:
So, you're out of money and you need to file bankruptcy. How much money is it going to cost you to have no money?
Once you've determined your eligibility and have made the decision to file, you will need the aid of a professional. And they will charge you for their time. There are going to be three sets of fees and costs: filing fees, bankruptcy classes/credit report, and attorney fees.
Filing fees are the most straightforward. It's $310 for a Chapter 13, $335 for a Chapter 7. There are circumstances when these fees might be waived, but don't count on qualifying — most courts are not very receptive. The two required online bankruptcy courses are going to set you back another $30 to $50, depending on the provider and whether or not you are filing jointly. Get ready for the most not-thrilling few hours of your life. Simple enough.
Here is where things get a bit trickier. How much are the attorney fees? This is going to vary by district, circumstance, and bankruptcy type. What should you do? Call multiple attorneys! Ask about their fees and find out everything they will charge you to do. Too many people hire an attorney just because they are the first to answer the phone or because their office is nearby. Don't spend more time researching the next toaster you buy on Amazon than you do hiring someone with massive influence over your financial future.
Leave it to an attorney to not answer the question at hand, "what will it actually cost?" Legal fees for a Chapter 7 range anywhere from $800 to $1,600 in my practice area, and $4,000 or more for the more complicated Chapter 13. Like any complicated legal process, there are too many variables to list here. Ask around, but keep in mind cheapest is not always best. "Cheaper" could mean the attorney has low overhead and a well-oiled practice ready to serve you at the fullest. "Cheapest" could mean "I have a legal degree from a beautiful Caribbean online university, and I have only been disciplined by the Court four times!" Explore your options and shop wisely.