The cost of bankruptcy will vary depending upon the country or state in which a person lives or a corporation exists. Most countries assess filing fees for individuals or businesses that want to go bankrupt. Many people find it difficult to claim bankruptcy without help from a lawyer, so there are legal fees to consider too. These are not the full cost of bankruptcy, since a filing of bankruptcy may continue to affect people or businesses for up to ten years after legal proceedings have occurred.
First, it’s important to understand that bankruptcy doesn’t always mean permanently escaping or having all debts erased. Under some laws like certain ones in the US, people or businesses may need to undergo a “means test” and if the court deems that there is some ability to pay back debts, they may have to continue to make payments as structured by the court. Individuals claiming bankruptcy in the US must also pay for and attend a credit counseling session, which usually costs about $50 US Dollars (USD) or more.
People seeking a bankruptcy ruling in the US will need to pay filing fees, which vary depending upon the type of bankruptcy claim. In 2008 for instance these fees were at least $200 US Dollars (USD). Payments to lawyers may depend on how much information the lawyer must gather and present to the courts. Some lawyers charge a flat fee for bankruptcy services for private individuals, and others charge on a case per case basis. US residents can easily pay above $500 USD to a lawyer for help in claiming bankruptcy in addition to filing fees.
Many don’t take into account additional cost of bankruptcy. For instance, it may take time to put all paperwork together and fully account for all debts owed. People may need to take time off of work to make a court appearance when judgment is finalized.
Cost of bankruptcy can also include its aftereffects, which are difficult to calculate. If people can get new credit cards after claiming bankruptcy, they may have to pay annual fees and higher rates on these cards. Credit rating is affected for ten years, and increasingly employers check credit rating when people apply for jobs. A hidden cost of bankruptcy might be difficulty securing employment in the future. Other costs that aren’t immediately evident include having to pay high deposits on things like utilities, potentially being barred from taking certain kinds of loans, especially home mortgages, and having trouble renting houses or apartments because of poor credit rating.
