Bankruptcy Cost

In bankruptcy there are two different costs for everyone;

• Base Rate Financial Contribution
  The cost of the bankrupt is approximately two hundred (200) dollars per month for the term (nine months) of the bankruptcy
• Surplus Income Contribution
  Where the bankrupt earns more income that prescribed by law the bankrupt must pay fifty (50) percent of this into the bankruptcy.

Although the cost of bankruptcy of $1800 dollars may seem expensive, all other debts and loans are discharged (dropped). After the bankruptcy is discharged there are no other payments.

The fee for your bankruptcy can be paid in monthly payments of about 200 dollars.

The base rate financial contribution for everyone filing for bankruptcy is approximately $1800.

The amount is payable monthly by the bankrupt.  Although $1800 may seem alot, remember that all other bills and payments will stop.

Many people find that the $200/month is dramatically less that what they were making in bill payments.

Some people they may incur additional costs in bankruptcy called “Surplus Payments”.

As well as the initial cost of the bankruptcy, in bankruptcy the government sets limits on what you can earn.  Where the income goes over this amount, the government believes the bankrupt should pay as “surplus payments in bankruptcy”.

The surplus payments are fifty percent (50%) over the base amount. For example, if there are two adults and two children, the family would be allowed to earn 47,976 per year excluding any allowable expenses after taxes and allowable expenses.  Surplus income is based upon the whole income for the family.

Surplus payment amounts are based upon what you earn from all sources.

Family Members / Income

• 1 person – $2,152 = $25,824/year
• 2 persons – $2,679 = $32,148/year
• 3 persons – $3293 = $39,516/year
• 4 persons – $3998 = $47,976/year
• 5 persons – $4535 = $54,420/year
• 6 persons – $5114 = $61,368/year
• 7 persons – $5694 = $68,328/year

Expenses like child support, medical costs, and child care are all deducted from the income before calculating what you should pay.

Understanding the cost of bankruptcy is based on several key factors. Here’s a detailed look at what influences the cost of bankruptcy:

• Average Monthly Income: Your monthly income plays a significant role in determining the cost of bankruptcy. If your income exceeds the threshold set by the government, you will be required to make surplus income contributions. This means paying 50% of the income that exceeds the prescribed limit into your bankruptcy estate.
• Value of Non-Exempt Assets: The value of any assets you own that are not protected by bankruptcy exemptions can affect the cost. Non-exempt assets may need to be sold to pay creditors, which can increase your financial obligations during the bankruptcy process.
• Family Size: The number of people in your family is taken into account when calculating your surplus income. Larger families have higher living expense allowances, which can reduce the amount of surplus income you need to contribute.
• Types of Expenses: Certain expenses, such as child care or child support, are considered when determining your payments. These necessary expenses are deducted from your income to calculate the surplus amount. This ensures that your essential financial responsibilities are met before contributing to the bankruptcy estate.
• Bankruptcy History: Whether this is your first or second bankruptcy impacts the cost and terms. A second bankruptcy typically comes with stricter terms and potentially higher costs, as the court views repeat bankruptcies with more scrutiny.

Knowing these factors helps you understand the total cost of bankruptcy and better prepare for the financial responsibilities involved.

By being informed, you can navigate the bankruptcy process with greater clarity and confidence, ensuring you meet all necessary requirements while managing your financial obligations effectively.