Any good bankruptcy attorney should make sure to have a conversation with you about bankruptcy costs. As a bankruptcy attorney in Charlotte, I spend a good bit of time each day speaking with individuals trying to decide whether to file bankruptcy. We discuss both the financial costs of bankruptcy, as well as any intangible costs associated with bankruptcy. Here are my thoughts:
Fees To File—Typically, your fees to file bankruptcy are your attorney fees, court filing fees, and perhaps a few administrative fees. In consumer bankruptcy, these are predictable and your attorney should be willing to give you a quote on total fees. One exception is in a Chapter 13 where the attorney may have to perform additional duties during the years the Chapter 13 is active (responding to a trustee’s Motion To Dismiss, defending a Motion For Relief From Stay, etc). Even most of those actions, however, have fees set by the court.
Conclusion—Ask the bankruptcy attorney for a quote sheet. Specifically, ask your attorney if their quoted fees include all filing fees and administrative fees. The court filing fee for a Chapter 7 is roughly $338 so it makes a difference when comparing attorneys’ fees.
Credit Scores—I have written previous articles about credit scores and how they are generally affected, when filing bankruptcy. This is a great question and it shows you’re thinking about the future. That being said, your score will typically bounce back within a year of filing, and without filing, the score would continue to drop if you were late on or missed payments to creditors.
Conclusion—The powerful relief provided by bankruptcy, combined with the ability to quickly recover your credit score to its pre-bankruptcy level and build from there, make it worth focusing on restoring your financial stability in the short-term, and focusing on rebuilding the credit score after filing bankruptcy.
Public Perception—Generally, I’ve found the stigma associated with bankruptcy is from a bygone era. One in which our parents and grandparents lived. People today—and in today’s slowly recovering economy—understand bankruptcy is a choice made by individuals who have already tried every other option. Not only will nobody know about your bankruptcy, but you might be surprised how many people just like you have filed.
Conclusion—This is not the time to let fear of how you will be perceived get in the way of restoring financial health to you and your family. Besides, while a bankruptcy is technically public information, with some exceptions, friends, employers, and relatives won’t find out unless you tell them.
Emotional Stress—This is an intangible I’ve become very comfortable discussing with my clients. I’m amazed at how mentally prepared most clients are for bankruptcy by the time they call my office. I’m always proud that they have decided to choose a peaceful financial life over the impossible task of managing creditors who refuse to be reasonable.
Conclusion—The emotional stress you’ve been through already with finances will give you the strength you need to focus on the goal: life after bankruptcy truly is a fresh start. I should know, I talk to my past clients all the time and I’m always excited to hear about what an amazing change it was for them.
If you would like to speak with an attorney about bankruptcy, please call me at 704.749.7747. I’m here to help you sort through the cost of bankruptcy, and I hope you choose to Recover With Us.