If you firmly believe that filing bankruptcy is going to put an end to your all your financial worries, you are truly mistaken. There is a general misconception that bankruptcy liberates you from debts completely. It is not so. Even before filing, you must be mentally prepared to spend some money for the initial costs that you are bound to incur.
Firstly, you are required to spend money on accountants for analyzing your financial state of affairs and matters regarding tax returns. If you have sound knowledge in finance, you can do it on your own. Sometimes you might have to spend out of your pockets to obtain the credit report as well. The new bankruptcy law gives you very little opportunity for filing bankruptcy under chapter 7. The debtors who are trapped in the clutches of debts should initially go through a credit counseling session and a debt management programe. Apart from this, you have to clear the "means test" in order to file bankruptcy under chapter 7. It is mainly to ascertain that you have no inflow of cash to repay your creditors.
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Needless to say that there is an enormous documentation work that is involved when you file for bankruptcy. You may incur huge costs for necessary paperwork. The filing charges may not exceed beyond $ 300 but a large share of money goes in the form of fees for your attorney. Some might charge a fixed rate on hourly basis while others might agree for payments to be made later. You can be sure of spending more than thousand dollars which is big money in given circumstances.
When you are Filing bankruptcy under Chapter 13, the court lays down a repayment plan and gives you a time frame of 5 years to settle your creditors. Debt settlement programe is definitely a better solution because there is a scope for reducing the amount of debt. Besides, any failure in making payments calls for penalties. When you compare the costs involved in filing bankruptcy, debt settlement is more effective as it takes only 3 to 4 years to erase your debts without affecting your credit rating.
At the end of the day, bankruptcy is a very costly affair that does not do you any good in terms of getting rid of your debt burden. All you gain is the label of insolvency, a permanent record, which will have its long lasting effect throughout your life.
Is Bankruptcy Right For You? Talk to Bankruptcy Attorneys Free and Confidential. Licensed bankruptcy attorneys are available. Attorneys will call you to discuss your case for free. Find out if bankruptcy is right for your situation.
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