Most people assume bankruptcy is something a person does when he or she has no more money. If you cannot afford to pay your bills, bankruptcy makes it possible to not pay them or it gives you longer to pay without financial penalty. This is true, but bankruptcy cannot be filed for free. It actually costs money to file for bankruptcy, but how much depends on where you live, what type of bankruptcy you file, and who you choose to have support you during the process.
Changes to Bankruptcy Law
Filing for bankruptcy is different than it was ten years or so ago. New bankruptcy laws have created a situation in which some people are actually too poor to get the protection bankruptcy provides. The cost of bankruptcy has risen a great deal under the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. What does this mean for you?
Filing Chapter 7 bankruptcy has much stricter requirement than it did in the past. The process is more complicated than before and it requires lawyers work more hours to complete the paperwork required to help a client file. One study showed the cost of fees was approximately 50% higher than it was prior to the law change. The average cost of filing during the first half of the last decade was less than $1000. This alone prices many people out of the bankruptcy market.
The news is no better for those filing Chapter 13 bankruptcy. The average cost today for a person to file this type of bankruptcy is approximately $3000, up from $2000 prior to the enacting of the new law.
Why is the Bankruptcy Process Tougher and More Expensive?
Considering the credit card companies were big supporters of the new bankruptcy law, it is no surprise it has made bankruptcy more difficult for consumers. These companies lose money when consumers file, so they do everything in their power to prevent that from happening. Even though bankruptcy can help a credit card company recover some of their money, it prevents an aggressive grab on their part for interest and fees.
In addition to attorney’s fees, accountability fees are also higher than ever before. Filers must also pay to attend a debtors’ education course before their filing is granted.
What does all of this mean for you? It is important to research your bankruptcy options carefully and be sure you are getting a good deal when you file. Filing fees might not be negotiable, but it is possible to search for an attorney that offers a fair rate and understands your financial restraints.
If you would like to know more about bankruptcy in Massachusetts or you are ready to discuss your options, contact the Law Office of Brian R. Lewis at 508-946-3323