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National public debt is well beyond the $15 trillion mark and the total student loan debt load has just crossed the $1 trillion threshold, overtaking credit card debts of the 314 million people populating the country. Needless to say, the American public is suffering from an excess of debt which has, over the last few years, turned into a substantial economic problem.

Filing bankruptcy was one of the only options available to millions of cash strapped Americans trying to deal with their debt problems. Doors seem to close fast as nearly 1 million consumers are too poor to file bankruptcy because the average cost of $1500 to facilitate the process is more than what they can afford to shell out.

Changes incorporated in the bankruptcy code

Under the provisions of Chapter 7, consumers will have to turn over their non exempt assets over to a court appointed trustee who will in turn  liquidate those assets and use the money to clear your debts as best as possible. The National Bureau of Economic Research conducted a survey recently and concluded that Chapter 7, the most common form of bankruptcy that individuals choose to file, has become economically unviable and equally hard to attain.

Since the changes incorporated into bankruptcy laws in 2005, the affordability factor of the process has gone up substantially and moreover, it has become equally hard to execute. The average fees attorneys charge for filing bankruptcy under Chapter 7 has gone up by more than 70 percent (depending on the state in which you reside) since 2005. As of now, the entire process, including attorney’s fees and court costs totals to somewhere around $1500 to $2000.

The changes introduced in 2005 also demands that debtors go through credit counseling before they are eligible for filing a bankruptcy petition. Along with that, consumers would also have to undergo the means test whereby the chapter under which he would be allowed to file bankruptcy will be determined.

Unlike Chapter 7, consumers filing bankruptcy under Chapter 13 go through a financial reorganization process in order to protect certain assets by building a plan to pay off as many of his debts as possible. Since the 2005 changes incorporated into the bankruptcy code, consumers filing under Chapter 13 will mandatorily have to enroll in a debt management program and produce the certificate of course completion in court.

As of today, the sole cost of filing bankruptcy under Chapter 7 stands at $306 and under Chapter 13 its $281 although the filing fees although the cost is entirely waived if your household income falls below 150 percent of the income poverty line.

Finding affordable professional legal help

Unemployment, medical bills, student loans and credit card debts have all added to the woes of consumers everywhere. Economic conditions are such that many people genuinely need to seek the protection of bankruptcy to get a fresh start as far as their finances are concerned.

Given the cost of the entire filing process, many of you might consider going through the process yourself without any professional legal help. It’s not a very good idea to file bankruptcy without the help of a lawyer since it is an extremely complicated process right from filing the form itself. There is a multitude of rules and procedures involved and a single mistake can lead to your petition being dismissed by the court.  In most cases, bankruptcy attorneys provide free consultation and there are low cost attorney services which charge minimum fees. Contact your legal aid society and they should be able to recommend a good low cost bankruptcy attorney to you.

With proper help you can
  • Lower your monthly payments
  • Reduce credit card interest rates
  • Waive late fees
  • Reduce collection calls
  • Avoid bankruptcy
  • Have only one monthly payment
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