There have always been myths surrounding bankruptcy. You may have heard filing is only for deadbeats or people who don't want to pay bills. There is a myth that after bankruptcy, your credit is forever ruined.
A new deterrent for filers is the idea that bankruptcy is overwhelmingly expensive and that it is possible to be "too broke" to file. Before believing everything you hear, or making a life-changing financial decision, it is important to understand the facts about bankruptcy. Chapter 7 or Chapter 13 may offer you the solution you are looking for to achieve debt relief.
According to a recent report, hundreds of thousands of Americans are considered, "too broke to file bankruptcy." While the average cost of filing Chapter 7 is over $1,500, most filers in Florida and nationwide have debts, accumulating fees and interest far beyond this base fee.
In the past, many bankruptcy filers have waiting to obtain their tax refund so that they have the cash to pay for the bankruptcy filing fees, which can run around $300. While you will also have to pay additional fees, including those for counseling or pre-discharge education, do not believe the hype that bankruptcy is through-the-roof expensive, unaffordable, or not worth the investment.
Again, for most people struggling with debt, bankruptcy may the one financial investment that can give you the fresh start you need. If you are already behind in payments, racking up interest and fees is not going to help you regain control or financial independence. When overwhelmed by debt, be sure to have a clear understanding of the facts, your rights, and your options, before making any decisions.
Source: CNN Money, "Too Broke to Go Bankruptcy: Price of Chapter 7 is More Than $1,500," Blake Ellis, May 7, 2012.