Who Pays For Bankruptcies?

People often ask us things like “Who Pays for Bankruptcies” or “Can I afford Bankruptcy.”  The Fact is, if you are asking yourself those questions, you probably should consider one more question: “Can you afford not to file Bankruptcy?”.

Financial relief can be obtained by people who find themselves with a lot of debt through bankruptcy protection. A fresh start can help get your life on the rails again by filing Chapter 7 bankruptcy. But there are costs involved. The actual cost of a Bankruptcy can be minimal when compared to the savings in debt that can be eliminated.

Bankruptcy Fees And Payments

When filing bankruptcy, there are three main components to the total you will pay:  (i) Debtor’s Education Courses;  (ii) Court Filing Fees;  and (iii) Lawyer’s Fees.

• Debtor’s Education Courses – There are two courses.  The First must be taken prior to filing Bankruptcy.  The Second one comes after the 341 Meeting with the Trustee.  Fees usually range from $10 to $50. If this is not affordable, it many be possible to get those fees waived;
• Court Filing Fees – The actual fee varies with the type of filing.  Currently $335 is the cost to file for Chapter 7 Bankruptcy, and $310 to file for Chapter 13 Bankruptcy;
• Lawyer’s Fees – Lawyers obviously charge for their time, but the majority of consumer Bankruptcies are based on a flat fee basis. Therefore, you will know the cost to pay at the start of the proceedings.

Paying For Bankruptcies

Normally the person who is filing for bankruptcy is responsible for the payment of Court Fees but people who earn less than 150% of the federal guidelines for poverty can request to have the fee waived. In those circumstances, the Bankruptcy Court absorbs all the related expenses so a person can be in a position to be successful in their Bankruptcy Case. Obviously, this places a financial burden on courts, they only grant fee waivers when it is obvious the person cannot afford the filing fees including when the case has been filed and the debt no longer has to be attended too.

If you are fortunate enough to have the court filing fee waived, it is likely you also will be able to obtain waivers for Debtor’s Education Courses. Likewise, if you fall under the poverty guidelines level, you likely will be able to find voulenteer or “Pro Bono” legal representation for free or a reduced cost.

Source: “Does The Government Pay for Bankruptcies?” Upsolve, 30 Aug. 2019, upsolve.org/learn/who-pays-for-bankruptcy/.