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The Ugly Truth About Bankruptcy (And Why You Probably Don't Even Need To Consider It)

This one word (bankruptcy) has such incredible power. As a financial coach, I hear it on the lips of some of the most desperate people I come into contact with.  

And it makes me really sad every single time.

Think about it for a minute, the mere concept of bankruptcy has the power to evoke feelings of desperation, guilt, terror, and utter failure. 

I understand completely because, like so many of our clients and subscribers, I was on the edge myself over a decade ago. You can read more about that at: $43k Paid Off!

The thing is, bankruptcy is not even a viable solution for about 95% (or more) of the folks we come into contact with.

Yep, that’s right it’s normally not something they don't even need to consider. 

We’ll talk more about that later. Let’s first create some clarity around what bankruptcy is and what it isn’t.


This free resource is helpful for many of our students when they find themselves in a situation where they can't pay all their bills and creditors/collectors are calling. It's in our free products and printables library. 


Bankruptcy, The Realities And Limitations

Because we get so many inquiries from new clients and subscribers who have inaccurate ideas about bankruptcy, let’s start with some of the realities and limitations.

The following information largely comes out of the Dave Ramsey “Financial Master Coach Training Manual”, which is sadly not available to the public.

This has been a phenomenal resource for me as I’ve lead clients, students and subscribers out of the terrors of potential bankruptcy.


Bankruptcy Realities

The cost for a Chapter 7 bankruptcy can range from $500-$3500 on average.

In general, costs ranging from $500 to $3,500 are considered typical for Chapter 7. You’ll be required to pay the fee before you file, since attorney’s fees could qualify as part of the debt discharged in a successful Chapter 7 filing.


The cost for a Chapter 13 bankruptcy can range from $2500-$6000.

Fees for a Chapter 13 filing generally range from $2,500 to $6,000, but you don’t usually have to pay the entire fee up front. You may be able to pay part of it before you file and cover the rest through your debt-repayment plan.