Fewer people are filing for bankruptcy, which is a good sign after the epidemic increase in the past couple of years. However, the high cost of even declaring bankruptcy makes it unaffordable to many people.
Bankruptcy no longer as often
From 2007 to 2008, bankruptcy filings in-creased 33 percent, and it increased 32 percent from 2008 to 2009, according to Deseret News. Many people ended up declaring personal bankruptcy between 2006 and 2008 because unemployment went up and the financial industry melted.
Fortunately, the national rate of bankruptcy increased much less from 2009 to 2010, when the 1.55 million filings for Chapters 11 and 7 marked a rise of only 8 percent. In 2011, according to the New York Times, the amount of nationwide bankruptcies fell 12 per-cent, to 1.4 million.
The declining number of bankruptcies is encouraging. However, the counterpart to the data is, accord-ing to CNN, which more individuals would file for bankruptcy if they could af-ford it.
Not enough money to declare bankruptcy
The National Bureau of Economic Research found in a recent report that the typical cost of declaring Chapter 7 bankruptcy is at least $1,500, which is estimated to put the cost of declaring bankruptcy out of reach for anywhere from 200,000 to 1 million individuals nationwide. The report's authors believe that tax returns can be used to file for Chapter 7, the most common form of bankruptcy.
The $1,500 will mostly go to the attorney. The fee from the attorney will add up to around $1,000 after considering the mandatory $300 federal court fee for filing. It also consists of that many people will have to pay an average of $85 to cover debtor's education courses and pre-bankruptcy counseling. This is needed for any person who is filing for bankruptcy.
Making it cheaper
Part of the expense involved is incurred by additional hoops to jump through and paperwork required by the 2005 Bankruptcy Abuse Prevention and Consumer Protection Act, which has made filing for bankruptcy more difficult to do. Inexorably, that involves more legal work and thus more in legal fees. The law was passed to be able to reduce un-necessary or frivolous filings, but critics have contended the law puts bankruptcy further out of reach for the poor.
However, some attorneys are willing to work pro bono, or without being paid. There are pro bono associations through which one can find an attorney who may be willing to take a case. Some judges will even waive filing fees if a person's income is 150 per-cent or less of the federal poverty level.
Bankruptcy no longer as often
From 2007 to 2008, bankruptcy filings in-creased 33 percent, and it increased 32 percent from 2008 to 2009, according to Deseret News. Many people ended up declaring personal bankruptcy between 2006 and 2008 because unemployment went up and the financial industry melted.
Fortunately, the national rate of bankruptcy increased much less from 2009 to 2010, when the 1.55 million filings for Chapters 11 and 7 marked a rise of only 8 percent. In 2011, according to the New York Times, the amount of nationwide bankruptcies fell 12 per-cent, to 1.4 million.
The declining number of bankruptcies is encouraging. However, the counterpart to the data is, accord-ing to CNN, which more individuals would file for bankruptcy if they could af-ford it.
Not enough money to declare bankruptcy
The National Bureau of Economic Research found in a recent report that the typical cost of declaring Chapter 7 bankruptcy is at least $1,500, which is estimated to put the cost of declaring bankruptcy out of reach for anywhere from 200,000 to 1 million individuals nationwide. The report's authors believe that tax returns can be used to file for Chapter 7, the most common form of bankruptcy.
The $1,500 will mostly go to the attorney. The fee from the attorney will add up to around $1,000 after considering the mandatory $300 federal court fee for filing. It also consists of that many people will have to pay an average of $85 to cover debtor's education courses and pre-bankruptcy counseling. This is needed for any person who is filing for bankruptcy.
Making it cheaper
Part of the expense involved is incurred by additional hoops to jump through and paperwork required by the 2005 Bankruptcy Abuse Prevention and Consumer Protection Act, which has made filing for bankruptcy more difficult to do. Inexorably, that involves more legal work and thus more in legal fees. The law was passed to be able to reduce un-necessary or frivolous filings, but critics have contended the law puts bankruptcy further out of reach for the poor.
However, some attorneys are willing to work pro bono, or without being paid. There are pro bono associations through which one can find an attorney who may be willing to take a case. Some judges will even waive filing fees if a person's income is 150 per-cent or less of the federal poverty level.
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