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Bankruptcy costs and facts

On Behalf of | Sep 6, 2017 | Bankruptcy

Virginia consumers who are considering bankruptcy may wonder what it will cost them. Even if a person does not use an attorney, there are filing fees. These fees vary depending on what kind of bankruptcy is being filed.

The most common kind of bankruptcy is a Chapter 7, and it costs $335. Chapter 7 is for people who cannot pay their debts at all. Any assets that are not exempt under federal or state law are liquidated by the trustee to help pay creditors back. Some people may be able to keep all their assets in this type of bankruptcy as long as they are not worth a great deal. A Chapter 7 will remain on a person’s credit report for 10 years.

With a Chapter 12 and Chapter 13 bankruptcy, debtors make a plan to pay back creditors over three or five years. Filing fees are $275 and $310 respectively. A Chapter 12 is for people who are family farmers and who have a regular income. The farm can keep operating during the bankruptcy. A Chapter 13 is for debtors who have enough income to create a payment plan. It stays on a credit report for seven years and may help a person save a home from foreclosure.

Filing for bankruptcy will stop creditor harassment and any actions against a person including lawsuits. One advantage of working with an attorney in a bankruptcy case is that bankruptcy paperwork can be complex, and if there are any errors or omissions, the case could be delayed or even dismissed. The attorney also may be able to clear up misconceptions a person has about bankruptcy such as the idea that it will permanently damage credit.