Many people consider filing for bankruptcy as a turning point, a step toward getting out of debt when it gets too hard to handle. The process gives people a chance to start over, but they need to plan for the fees that come with it. Knowing exactly how much to budget before filing for bankruptcy in Arizona will help you avoid extra stress and make smart money choices. This guide lists the main costs, optional expenditures, and hidden fees that people in Arizona should know about while they are getting ready to file for bankruptcy.
The Two Main Bankruptcy Options
Before looking at the charges, it’s necessary to know what Chapter Seven and Chapter Thirteen are, which are the two most prevalent varieties of personal bankruptcy. Both help with debt, but they do it in different ways and cost different amounts.
Chapter Seven, sometimes known as liquidation bankruptcy, wipes out most unsecured debts, like credit card payments and medical costs. It is usually faster and cheaper, but only if you meet certain income requirements.
Reorganization bankruptcy, or Chapter Thirteen, lets you set up a payment plan that lasts three to five years. It costs more up front and over time, but it’s a good choice for people who want to secure their property, like a car or a house.
The kind of bankruptcy you file has a direct effect on your entire budget.
Court Filing Fees
The first required cost is the court filing fee, which is the same all throughout the country but is charged in each state.
The filing fee for Chapter Seven bankruptcy is usually about $400. This includes the expense of running the business and the fee for the trustee. The same federal amounts apply in Arizona courts, but they may let some people pay in installments.
The filing fee for Chapter 13 is a little higher, usually around $300. This minor increase doesn’t make a big difference, but it does affect your entire budget.
You have to pay these fees to initiate your case unless you ask for installments or are eligible for a waiver in Chapter Seven. If you want to explore additional details about the overall costs and the filing process, you can learn more here before moving forward with your Arizona bankruptcy plan.
Attorney Fees In Arizona
Most of the money you spend on bankruptcy goes to your lawyer. Most clients feel better about hiring an experienced Arizona bankruptcy lawyer because bankruptcy entails a lot of paperwork, asset evaluation, exemptions, and court processes.
In Arizona, the cost of hiring a Chapter Seven lawyer usually ranges from $1,500 to $2,500, depending on how complicated the case is, how much debt is involved, and how experienced the lawyer is.
The expenses for a Chapter 13 attorney are higher since they will represent you for the whole repayment plan, which can last for several years. Expect to pay between $3,000 and $5,000, but these costs can sometimes be incorporated in the repayment plan instead of being paid up front.
Setting up a consultation is a good idea because many Arizona bankruptcy lawyers offer free first appointments to go over your case and talk about charges.
Credit Counseling And Debtor Education Courses
People who file for bankruptcy must take two classes, according to federal law.
The first step is to meet with a credit counselor, which must be done before filing. This course helps you learn about other options outside bankruptcy and makes sure that filing is the appropriate thing to do.
The second is a course on how to be a good debtor, which you take after filing but before the discharge. It tells you how to repair your financial future.
You can take both classes online, and they normally cost between $25 and $60 apiece. If you live in Arizona and want to take both courses, you should prepare to pay between fifty and one hundred dollars unless you qualify for lower or waived costs based on your income.
Potential Miscellaneous And Hidden Costs
In addition to the big expenditures, there may be some smaller ones that come up throughout your bankruptcy.
It can be expensive to get all the documents you need. You could need to print out your financial records, pay for tax transcripts, or ask banks for statements.
You might require new appraisals or valuations if you own property. A vehicle evaluation can cost as little as $75, whereas a home appraisal might cost more than $300.
If your Arizona courthouse or lawyer’s office is distant from your home, you need to additionally plan for the cost of getting there. A lot of encounters happen online these days, yet some people may still need to meet in person.
In Chapter Thirteen cases, the repayment plan includes extra fees for the trustee. Even though they aren’t paid up front, they do have an effect on the long-term financial situation.
Emergency Funds For Unexpected Expenses
After you file for bankruptcy, your finances normally become more rigid because of repayment schedules or new budgets. It is very important to have an emergency fund. Before you file, try to save at least a few hundred bucks. This buffer keeps you safe from unanticipated money problems that could mess up your case.
Final Thoughts
Preparing a realistic budget before filing bankruptcy in Arizona will enable you to navigate through the process more confidently and clearly, even though charges may seem high at first. Keep in mind that bankruptcy is an investment for a brighter future and by knowing all costs related to filing fees, legal fees, schooling requirements and any hidden charges which might not immediately become apparent, you will be better equipped for completion. Speaking with an Arizona bankruptcy lawyer will give a personalized estimate and put your mind at ease as they provide personalized estimates tailored specifically for each chapter or case cost so preparing in advance can become the first real step to getting finances under control again!
