Cost

Although the cost of bankruptcy of $1800 dollars may seem expensive, all other debts and loans are discharged (dropped).

After the bankruptcy is discharged you will have no other payments.

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

Many people have bills far in excess of 200 dollars so the fee for bankruptcy is usually well worth the 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.

For 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”.  Surplus payments are based upon how many family members are being supported by your income minus any exemptions.

Where the income goes over the set amount, the Bankruptcy Act requires the bankrupt to make surplus payments of 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.

Where the family income is above the amount the bankrupt would have to pay 50% of the excess as surplus income payments. For example should the you earn an additional $200 dollars per month the cost of the bankruptcy would increase by 50% of $200 which would be $100.

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

The amount based upon what you are earning from all sources.  Expenses like child support, medical costs, and child care are all deducted from the income before calculating what you should pay.

If your income goes up or down, or if there are changes to the number of people in your family, the trustee will take that into consideration – so the payment and your costs for bankruptcy can be modified.

The payments in bankruptcy are dependant upon:

• average monthly income
• value of any non-exempt assets
• number of people in your family
• types of expenses, like child care or child support
• is this your first or second bankruptcy

One of of the benefits of declaring bankruptcy is that the trustee will notify your creditors that you are unable to pay your debts, and that they must now deal directly with the trustee (the trustee will deal with them not you).

Where wages have been garnished, the garnishment will be removed, and the cost of bankruptcy is usually dramatically less than what you are paying now in monthly payments.

When you go bankrupt, you assign your assets (the things you own) to the trustee for the benefit of your creditors, except assets are exempt from seizure.

Even if an asset isn’t exempt, you often have the option to keep it by simply paying its value into your bankruptcy.

Once the process is completed, the debtor is relieved of all debt obligations.