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Bankruptcy To Cost More

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    Bankruptcy To Cost More

    Those that can least afford to pay their bills are going to have to pay a lot more if they file for bankruptcy. Worse, they may not be able to find any lawyers who are willing to help them out of their financial troubles.

    The problem that will increase costs and make it harder for those seeking bankruptcy to find a lawyer willing to represent them comes from details in the new law. The new bankruptcy law makes lawyers liable for any misleading statements or inaccuracies in a client's case. Many predict that this will force lawyers to spend more time and effort to keep themselves from becoming liable by hiring accountants and other experts to verify all the information clients give them, down to the littlest details. This will likely make the prices lawyers charge clients to skyrocket.

    The Congressional Budget Office said in their cost estimate report that complying with the provisions of the bill is likely to increase attorney costs by $150 to $500 and that some of the increased costs are most likely going to be passed onto consumers filing for bankruptcy. Critics say that these estimates are far below the real cost that will be passed on to those seeking bankruptcy protection and could be thousands of dollars more.

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    Currently most non-business bankruptcies are Chapter 7 bankruptcies since it's quite quick and not too expensive. At the moment an average Chapter 7 bankruptcy filing costs approximately $1,000 in lawyer's fees. Chapter 7 bankruptcy liquidates your assets and gives the proceeds to creditors (except for those protected by state laws), while most of any other debts are cancelled.

    Chapter 13 bankruptcy filings currently cost approximately $2,500. Chapter 13 bankruptcy filings are more expensive because they require more time and effort from the lawyer than a Chapter 7 bankruptcy filing and also require the person filing for bankruptcy to pay back many of the debts over a period of time up to five years.

    The new law will make Chapter 7 bankruptcy filings much more difficult to qualify for which will force more people to file Chapter 13. This means that in addition to increasing the costs of filing for bankruptcy, many people will also have to file a more expensive form of bankruptcy in the future.