The Three Main Costs Of Bankruptcy And How Much Bankruptcy Costs
No matter which trustee you go with there are certain fees set by the government that youll need to pay. However, the overall costs of bankruptcy will depend on how much you make, how big your family is, your assets and more.
In total, there are three main costs associated with bankruptcy and they are:
In Canada, the minimum cost for filing for bankruptcy is $1,800. This can be paid at once or in $200 installments over 9 months. This fee is used to cover certain costs like administration fees, your LIT, government fees, and more.
Surplus income payments are calculated using the income limits created by the Office of the Superintendent of Bankruptcy. To calculate your surplus income payment simply take the difference between your income and the income limit and then divide it by two. If your surplus income payment is less than $200, you can be discharged from bankruptcy after 9 months. All youll need to pay is the base contribution mentioned above.
However, surplus income payments are required if your surplus income payment is more than $200. Moreover, if it is, your bankruptcy will be extended for another year . This basically means that those who make a lot of money will generally have to pay more for their bankruptcy than those who are barely scraping by.
Learn to calculate your bankruptcy payments.
Assets You Lose
How Long Does A Second Bankruptcy Last In Canada
Not only will your second time filing for bankruptcy be more expensive than the first, the second bankruptcy actually lasts longer. As you could likely decipher from the breakdown in the last section, a first bankruptcy lasts a minimum of 9 months and a second will last a minimum of 24 months. However, if you do indeed have surplus income, your second bankruptcy can extend to 3 whole years.
However, while these bankruptcies only last this long, they will appear on your for a lot longer. Your first bankruptcy will show on your credit report for at least 6 years from the date of discharge. However, if you have a second bankruptcy, it will, unfortunately, be a lot longer. According to Equifax, the largest in the country, a second bankruptcy is kept on your credit report for 14 years.
Look here to find out how long other credit information stays on your credit report.
Thats why you should be absolutely certain that a second bankruptcy really is your best choice, as it leaves a lasting impression on your report. If you are concerned about the potential of filing for a second bankruptcy, be sure to reach out to a licensed insolvency trustee to see what other options you might have at your disposal.
Before filing for bankruptcy at all, consider these better options.
How To Pay For Your Bankruptcy
Filing for bankruptcy will cost you even though youre in no position to pay. Yes, in perhaps the ultimate Catch-22, youll need money to let your creditors know you dont have any.
Though covering the cost of bankruptcy might not be the largest problem on your agenda, it is an issue. Most bankruptcy petitions require some form of legal help, and the more complicated the filing, the more help youll need. That means hiring a lawyer, and unless you know one who works for free, it will require money.
Legal fees are the biggest headache, but not the only one. Youll also have to pay court costs and a fee for mandatory credit counseling. The combined bill could run into the thousands of dollars, so before you load up your briefcase and head for the courthouse, you need to know what you need to do, how much it will cost and where youll find the money.
If youre unable to borrow enough money from family or friends to pay a lawyer, other options exist:
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Your Total Bankruptcy Cost
Adding up all of our costs, youre looking at $350-$450 if you file pro se. Of course, its overwhelmingly likely that your case will be dismissed and youll be left on your own to face your creditors. With an attorney, an average Chapter 7 case can cost anywhere from $1,500 to $3,000. An average Chapter 13 case will run you from $3,000 to $4,000.
Consider that the average indebted household carries over $15,000 in alone, not to mention medical debt, personal loans, second mortgages on underwater homes, and other types of unsecured debt. In bankruptcy, youd pay pennies on the dollar toward that debt.
With that in mind, a few thousand dollars seems like a small price to pay.
Cost Of Hiring A Bankruptcy Attorney In The Milwaukee Area:
Bankruptcy attorney fees vary greatly. Most Milwaukee bankruptcy lawyers charge a flat fee between $1000 and $3000 to file for bankruptcy under Chapter 7 or Chapter 13. Others charge more, especially if matters are complicated by civil judgements, medical debt, liens, or tax debt.
Every case is unique, which is why a reputable bankruptcy attorney cannot just quote you a price over the phone. Youre better off meeting for a consultation so the bankruptcy lawyer can get a better understanding of your situation and quote you an accurate cost for their services.
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How Much Does It Cost To File For Bankruptcy
Initially, there is no upfront cost in filing for bankruptcy. Your initial consultation with a Licensed Insolvency Trustee is free. The Trustee will evaluate your finances and make a recommendation on filing a consumer proposal or bankruptcy free of charge.
If you decide to proceed and file based on the Trustees recommendation, then you will begin to incur costs.
Filing For Bankruptcy Can Cost Anywhere From A Few Hundred To A Few Thousand Dollars Depending On The Type Of Bankruptcy Filed And Whether You Hire An Attorney Or Take A Diy Approach
Filing fees and other miscellaneous costs required to file a bankruptcy petition typically range from $300 to $400. If youre filing on your own, you may not have to pay much more than that.
Working with a bankruptcy lawyer can add to those figures significantly. Their fees can vary widely based on the type of bankruptcy you file for, the market rate where your attorney practices and the complexity of your financial situation.
Coming up with any extra money might seem impossible if youre already struggling to pay for basic expenses and creditors are breathing down your neck. Luckily, assistance may be available if you believe bankruptcy is the right choice for you.
Lets look at the two common types of bankruptcy, the fees you may be responsible for and a few ways you might be able to pay for them.
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Paying The Fee In Installments
You can ask the court to pay the filing fee in installments – to make payments to the court. This gives you the benefit of immediate bankruptcy protection from creditors without having to come up with the full amount all at once. For folks who are getting their wages garnished, this is especially helpful as the garnishment has to stop once the bankruptcy petition has been filed with the court.
All installment payments must be paid within 120 days after bankruptcy filing. If the bankruptcy court approves your application, the payment due dates will be listed in the court’s Order Approving Payment of Filing Fee in Installments.
If you plan on asking to pay in installments, itâs important to do two things before filing:
Find out how much your bankruptcy district charges as a down payment with the application
The down payment counts towards the total fee. Each bankruptcy district sets its own minimum.
What Are Bankruptcy Trustee Fees
All bankruptcy trustee fees are regulated by the federal government and are included as part of your bankruptcy or consumer proposal payments.
Most personal bankruptcies in Ontario are summary administrations. Fees in a summary administration are based on a government tariff set our under Rule 128 of the Bankruptcy & Insolvency Act and are based largely on a percentage of realizations in a bankrupts estate. These fees are paid before distribution is made to the creditors so it is effectively the creditors who are paying the bankruptcy trustees fees. These fees are calculated as:
- 100% of the first $975
- 35% up to the next $2,000
- 50% of receipts over $2,000.
- Reimbursement for credit counselling fees, filing fees, and administration costs.
You are not required to pay an extra fee to the trustee. The trustee receives their fee out of the monthly contributions you are making. For example, if you are required to pay $200 per month based on your income that is all you pay. There are no extra fees because the trustee receives their fee out of that $200 per month payment.
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Experience Of The Attorney
Seasoned lawyers are more sought after than attorneys straight out of law school. Newer lawyers may be willing to represent you for less money. While this may be a bargain if you have a simple case, it may cost you more in the end if you have a complicated situation that needs the wisdom that comes with experience.
Pushing Chapter 13 Bankruptcy
The reason you want to be aware of the differences between Chapter 7 and Chapter 13 bankruptcy is to make sure you dont get pushed into Chapter 13 bankruptcy.
Why would a bankruptcy attorney suggest a Chapter 13 bankruptcy when you qualify for a Chapter 7 bankruptcy?
Take a wild guess. Could it be about the costs associated with Chapter 13? Ill never tell.
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What Is Included In The Costs To Declare Bankruptcy
First, its important to mention that everyones situation is unique. So, the exact amount that you will pay to file for bankruptcy will depend on your circumstances. Your monthly income and assets, ongoing expenses, living costs, and family size will all have an impact. A Licensed Insolvency Trustee will help you determine what you will need to pay to declare bankruptcy.
Overall, bankruptcy costs include:
- The administrative costs for the bankruptcy process
- Any assets that you must surrender under bankruptcy law to help repay your creditors
- Surplus income payments that are required under bankruptcy law
Do You Have To Pay Debt After Bankruptcy
A bankruptcy discharge eliminates debts, but it doesnt eliminate liens. If you have a secured debta debt where the creditor has a lien on your propertybankruptcy can eliminate your obligation to pay the debt. However, it wont take the lien off the propertythe creditor can still recover the collateral.
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How Much Does It Cost To File Bankruptcy
The cost of bankruptcy can vary depending on your circumstances.
In general, filing Chapter 7 costs $335, about $100 in possible additional fees, and between $1,000 and $3,500 for a lawyer.
Chapter 13 costs $310 to file, about $100 in possible additional fees, and between $2,000 and $5,000 for a lawyer.
Their Staff Are Incredible
Whatever your financial worries, trepidation or fear of being judged/forced into bankruptcy get CCS to help. Their staff are incredible, couldnt have dealt with a better group of people. They are truly dedicated to finding practical solutions, advocating for your financial future. First they provide hope, then they help and finish by delivering happiness.
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How Many Times Can You Apply For Bankruptcy
Technically, there is no law against filing or applying for bankruptcy as many times as you want. However, any more bankruptcy filings after your third are unlikely to be accepted/discharged. Remember, your third bankruptcy involves asking a court to discharge you, so if you go back for a fourth, there is a good chance they will refuse to give you a discharge. Because of this, it is best not to file more than twice, if you can help it.
Want to know if you can file for bankruptcy online in Canada? Find out here.
How Much Does It Cost To File A Chapter 13 Bankruptcy
The filing fee for bankruptcy under Chapter 13 is $310 while the attorney fee range from $1,500 to around $6,000. The total cost should thus be anywhere between $1,810 and $6,310. Note that the filing fees are the same in all states. However, the attorney charges might be different depending on the state where one files bankruptcy.
Its important to keep in mind there may be other miscellaneous costs incurred during the process for both Chapter 7 and Chapter 13 Bankruptcy. Such expenses will likely be between $300 and $400. You can, however, lower your costs by finding a pro bono lawyer who will handle your case for free. In case a pro bono legal rep is not an alternative, you can consider creating a payment plan that will help you offset the bills without much of a hassle.
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Waived Bankruptcy Course Fee
Bankruptcy filers are required to take two courses on the subject before their debts are forgiven. A credit counseling course must be completed before filing Chapter 7, and a Debtor Education Course is required once you receive a case number.
The pre-bankruptcy helps determine if bankruptcy is the right step. The debtor education course is a mandatory two-hour course focused on handling personal finances after bankruptcy.
Courses are taken through approved providers, with the cost dependent on which provider you choose. The combined cost of both courses may be as low as $30, and should never be higher than $50.
As in the filing fee, the cost of the courses can be waived if your income is so low that you feel you cannot afford the fee. The request for a waiver is made through the agency or entity that provides the courses.
Taking the courses is serious. If you dont complete the credit counseling course, your case could be dismissed. If you do not complete debtor education before the deadline, you will not receive a discharge and will owe the debts that brought you to bankruptcy. Take the course requirements seriously.
How Much Does It Cost To Declare Bankruptcy
You may be surprised to learn that it costs money to claim bankruptcy in Canada. The cost of bankruptcy differs for each individual as it is based on monthly income, expenses, family size, and assets. Without knowing the specifics of an individual situation, we cant give the exact costs. However, we can walk you through all the considerations that an Ontario bankruptcy trustee will talk about when determining what a bankruptcy will cost.
There are three components to the cost to file bankruptcy in Ontario or any province in Canada:
How you pay your fees and monthly payments may differ by trustee. Hoyes Michalos is one of the only Ontario bankruptcy trustees who offer the convenience of flexible pre-authorized payments to help make managing your bankruptcy payments easier. You can set your payments monthly, weekly, bi-weekly whatever works for you. We do not collect substantial up-front fees which may be the case with some trustees and is often the case with other debt consultants.
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Determining The Full Cost Of Bankruptcy
So is bankruptcy the correct option for you? Start by adding up the cost of bankruptcy.
If you will be paying $5,000 because of your surplus income, and if you will lose a further $5,000 in assets, thats a total cost of $10,000. If your total debts are $6,000, filing bankruptcy doesnt make any sense.
A consumer proposal is also an option. If you will be required to pay totaling $10,000 in a 21 month period, offering a proposal of $200 per month for 60 months might be a better option. The cost is slightly higher, but at $200 per month its more affordable each month.
Is Chapter 7 A Good Option For Low Cost Bankruptcy
Yes, for most people, Chapter 7 is the best option for a low-cost bankruptcy, because in Chapter 7 there are ways to reduce or waive costs.
One could see their filing fee and/or bankruptcy court fee waived, and even file without an attorney if the case is relatively simple. Because of these reduced costs, Chapter 7 bankruptcy is generally the best option for low cost bankruptcy.
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How Much Will Credit Counseling Courses Cost
The first major expense related to bankruptcy is the credit counseling process. In order to go forward with bankruptcy, you will need to undergo a credit counseling course within 180 days before your initial filing.The counseling will be done at a government-approved program. The session will typically last between 60 to 90 minutes and can take place either in person or remotely. You will also take a counseling course following the filing of bankruptcy, known as Post-Filing Debtor Education. These courses do cost money.Some attorneys will offer discounts or digital codes to reduce or eliminate the cost of these courses. These are only issued if you work with certain attorneys. Some inexpensive attorneys will either refuse to issue or choose not to support you in this process. If you cannot afford the counseling course, you will be administered a waiver.The price for these courses can vary, depending. On average, the whole course can cost anywhere between $15 to $100 dollars. On average, the Federal Trade Commission claims you will probably pay approximately $50 for Pre-Bankruptcy Counseling, followed by an additional $50 for the Post-Filing Debtor Education.