The #1 Thing People Miss When Filing for Bankrupcty
Filing for bankruptcy isn’t cheap! A quick survey of lawyers in my area put the cost for filing with a lawyer between $1,500 and $3,000 for a simple bankruptcy. If you’re swimming in bills and deluged with debt collector calls, you may be considering bankruptcy as an option.
But here’s the #1 thing that people filing bankruptcy don’t know about: and it could save you thousands of dollars.
Filing for bankruptcy on your own is easy
That’s right. It’s the dirty little secret that lawyer’s don’t want you to know. Lawyers charge you $3,000 to fill out the paperwork not because it’s difficult or impossible. They convince you to let them file on your behalf because they want to line their pockets to the tune of $1,000 per hour.
I’ll say that again so it sinks in: one thousand dollars per hour.
Granted, that top hourly rate is charged to those who can afford it (e.g. corporations), but even Joe Average walking in off the street to see a bottom rung lawyer can expect to pay about $300 per hour, and the lawyer won’t even be doing the work! He’ll have his legal assistant fill out the paperwork. Note that he’ll also charge you that rate for his assistant walking to the courthouse and waiting in court to physically file the papers. Do you really want to pay someone $300 an hour to do that?
Here’s how easy it is to file for bankruptcy:
- Take an approved credit counseling class. Your local bankruptcy court will have this information. It costs around $50 and you must take one before you file: you’ll need to show the certificate of completion.
- Decide which type, or “chapter,” of bankruptcy to file. In Chapter 7 bankruptcy you sell all your assets to pay as much as you can back, then you have a clean slate (and no assets). In Chapter 13 you can keep certain items (like your house), but you enter into a repayment plan for 3 to 5 years to pay back your unsecured creditors some of the money you owe them.
- Download the correct forms from the U.S. Bankruptcy Courts.
- Fill the form out in its entirety. Leave no question unanswered. Write “not applicable” if it’s not applicable to your situation.
- Pull all three credit of your reports. The three credit reporting agencies are Equifax, Experian, and TransUnion. List everyone you owe money to from those reports. It’s imperative that you include them all, to avoid later fees. (This step is a bit of a pain if you have many of creditors, but you’ll have to do it even if you hire a lawyer, they won’t do it for you!)
- File the forms at your local bankruptcy court, which is usually in the nearest county seat. check your local government offices for information.
- File the paperwork in the court. It will cost you about a $300 filing fee. Bankruptcy courts do not usually accept checks. Pay by money order, and keep the receipt. (Note that this cost is not included in most lawyers’ fees, which means you’ll pay them and you’ll pay the court)
- Show up for court on your scheduled date.
You will spend more time sitting in a lawyer’s office and waiting for them than you would filling out the paperwork yourself. The downloadable documents contain all the information you need: what to bring, what to provide, necessary documents. And you’ll be saving yourself thousands of dollars in the process.
Think about it as paying yourself $300 per hour!
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