What is the Cost of Declaring Bankruptcy and Are There Any Other Options?

A lot of people are running into financial difficultycurrently possess will need to be listed, by
these days - especially with a lot of majorrequiring you to take a "means test," and then a
corporations going through layoffs and buyouts.decision will be made as to what you can keep
What this means is that a lot of people findand what you cannot. Everything will fall under an
themselves suddenly unemployed and it may take"exempt" or a "non-exempt clause." You keep the
some time to get another good paying job. When"exempt" items, and lose the rest. The
financial difficulties come, and they stay around"non-exempt" items will either be sold, or you will
for awhile, the thought of declaring bankruptcy willbe required to pay them back. Some things that
come into some people's minds - especially whenare not exempt are child support and education
the debt starts getting out of hand, with no lightcosts.
at the end of the tunnel. Here are some thoughtsThe cost for declaring bankruptcy can run up to
about bankruptcy that will help you to make thatabout $1,500 for personal bankruptcy. This
important decision of "Should I, or shouldn't I?"includes the filing charges, and the lawyer's fees.
What Declaring Bankruptcy MeansThe fees, however, are dependent upon how
Declaring bankruptcy is basically an indication thatmuch of an income you have, and it will vary
you are not able to pay the debts that you havefrom one state to another. The process of
legally incurred. For this reason, and the legalobtaining a legal declaration of bankruptcy,
examination of your bills and the way you handleassuming everything is in order, can take up to
your finances, as well as the humiliation involved,six months.
makes it a rather stressful process. It means thatAfter The Declaration Of Bankruptcy
you will have to seek credit counseling, too.Once you have obtained a legal declaration of
Because so many people are attempting to getbankruptcy, all of your creditors know where
out of their debts, for one reason or another,they stand. For some, the debts are discharged,
Congress has passed an Act, which was signedand others have received what will be paid to
by President Bush in 2005, to place certainthem, or they know what will soon be coming to
limitations on declaring bankruptcy and who canthem. However, it also means that your credit
do it. This Act, called the "Bankruptcy Abuse andrates have been destroyed, and it will take years
Consumer Protection Act," seeks to make itto fully repair it. The bankruptcy is placed on your
more difficult to declare bankruptcy and to helpcredit rating and will remain there for the next ten
the creditor to receive a higher degree ofyears.
compensation. This Act called for higherWhat Other Options Are There?
bankruptcy filing fees, credit counseling, andIf you are now in a position where you need to
making it more difficult to file under Chapter 7,consider bankruptcy, then there are some other
making it necessary for more people to file underoptions that may yet be available to you.
Chapter 13 bankruptcy. Many other details are1. Get Credit Counseling
also covered in the Act that place furtherBy this, it means work through a debt negotiation
limitations on bankruptcy.company who will take your case to the various
Two Types of Bankruptcycreditors in an attempt to work out some kind of
Filing under a Chapter 13 bankruptcy means thata deal. This could be a good step in the right
there is a "reorganization" of your finances, and itdirection because creditors know that if you
does mean that you do repay much of yourdeclare bankruptcy, then they may not get
existing debt. You are required to make a plananything. Oftentimes, they will work with you.
that enables you to pay back a lot of your2. Renegotiate Your Loans
existing debt in the next three to five years. ThisOnce again, by talking with your creditors, you
means the sale of some of your properties (or allmay be able to renegotiate for better loan terms.
of them) in order to satisfy the debt. It is theThis could give you a greater leeway financially
bankruptcy Trustee who will make the decision asthat could provide just enough of an edge to
to what needs to be sold - not you.enable you to get through it with having to
Filing under a Chapter 7 bankruptcy means, oncedeclare bankruptcy.
again, that the various assets that you do