As millions of consumers across the country struggle with credit card debt and other monthly payments, many have been forced to consider filing for bankruptcy. And the price of doing so is on the rise.
According to a new study from the American Bankruptcy Institute Law Review, the cost of filing for either Chapter 7 or 13 bankruptcy has risen 55 percent since Congress passed reforms to make it harder to do so in 2005. Citing data from cases in Florida, Illinois, Georgia, Maine, Utah and West Virginia, the study found that fees and expenses for attorneys and trustees, filing costs and credit counseling services have led to the increases. In addition, they have reduced the total amount creditors make against the money they’re owed.
The study found that Chapter 13 filings now cost consumers $4,077 on average, up from $2,930 in 2005. Similarly, the price of a Chapter 7 case jumped from $900 to $1,399.
While bankruptcy may seem like an attractive option for consumers who are deeply in debt, many experts say that seeking such protection should only be considered as a last resort.