When considering bankruptcy, understanding the costs helps you make an informed decision. In Virginia, the cost difference between Chapter 7 and Chapter 13 bankruptcy can be significant, and knowing the differences can help you choose the best option.
Chapter 7 bankruptcy
Chapter 7 bankruptcy involves lower upfront costs. In Virginia, the filing fee is $338. Attorneys typically charge $1,000 to $1,500 to handle the discharge of most unsecured debts. This type of bankruptcy helps individuals who have a limited income and are not in a position to repay their debts. Credit counseling and a debtor education course can add around $50 to $100 to your costs.
Chapter 13 bankruptcy
Chapter 13 bankruptcy typically involves a higher overall cost. The filing fee is lower, at $313. However, the attorney’s fees are higher, ranging from $3,000 to $4,500, reflecting the complexity of the process. Chapter 13 bankruptcy requires you to create a repayment plan to pay back a portion of your debts.
You must obtain court approval for Chapter 13 bankruptcy. The repayment plan can include additional costs, like trustee fees, which typically account for about 10% of your payments.
Additional considerations
In Virginia, you must pass a means test to qualify for Chapter 7 bankruptcy. This evaluates your income as well as your expenses to determine if you are eligible.
Choosing between Chapter 7 and Chapter 13 bankruptcy depends on your financial situation and long-term goals. Understanding the costs allows you to determine which chapter is best for you.