Cost of Bankruptcy

By Paul Atredki

As the global economic state continues to deteriorate, the amount of individuals and corporations potentially facing bankruptcy are beginning to increase. The cost of bankruptcy ultimately depends on the state or country where the bankruptcy is being petitioned.

Many countries will assess additional fees against business or individuals initiating the bankruptcy process. Furthermore, as the bankruptcy process may often prove difficult, most individuals will consider hiring a lawyer. This will increase the final cost of filling bankruptcy due to legal fees. However, be aware that the complete cost of bankruptcy may actually result in higher costs, as the implications of a bankruptcy will remain on record up to ten years and will likely continue to impact both businesses or individual consumers.

An important point to make is that if a bankruptcy is granted, it will not necessarily result in erasing all of an entity's debt or legal obligations. For example, under US law, individuals or a corporation may be legally required to submit to a "means test". Should the court decide that the entity is able to repay some of the debt, they may be legally required by the court to adhere to a repayment plan determined at the proceeding. Additionally, someone seeking individual bankruptcy within the US will be required to enroll in a counseling session.

This credit counseling typically costs approximately $50 US Dollars (USD) and will not be able to recover the cost, also increasing the costs of bankruptcy.

As mentioned previously, those in the US filing for a bankruptcy ruling will incur filing costs, which are determined by the specific bankruptcy claim. In 2008, the filing fees for a typical bankruptcy filing cost $200 US Dollars (USD) or more. If a lawyer is hired, costs will be determined by the amount of time and information gathering required in order to present the case in court. The payment may be charged as a one time flat fee or possibly on a case by case basis. In the US, individuals could pay $500 USD or more for legal help in the bankruptcy process. The additional costs associated with bankruptcy are often overlooked - time associated with searching for all the necessary paperwork, calculating the full cost of all debts, and the cost of taking time from work in order to appear in court for the judgment.

Furthermore, the after-effects and eventual costs of bankruptcy may prove difficult to quantify. For example, individuals applying for new credit cards after a bankruptcy may be subjected to higher annual rates or annual fees. An individual's credit score will be influenced by a bankruptcy for up to ten years, and there is a growing trend with employers checking a job applicant's credit rating during the hiring process. Due to poor credit ratings, other costs of filing bankruptcy may be: - Paying higher deposits on utility services - Unable to get approval on loans (specifically home mortgages) - Difficulty to rent an apartment or home

When filing for bankruptcy, all associated costs must be considered. If you are considering applying for bankruptcy, please feel free to use the aforementioned information. Should you require more information on the cost of bankruptcy, please search the Internet as there is a large amount of information on this topic available.

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