In a Nutshell

When individuals find themselves in debt, bankruptcy can be a solution that gives you a fresh start. But when someone files for bankruptcy, who pays for it? Learn more here.

Written by Rohan Pavuluri.  
Updated July 22, 2020


If you are faced with overwhelming debt, you’re not alone. Many Americans today are drowning in financial burden and are in need of a solution. Fortunately, filing for bankruptcy can be the answer to all of your financial problems and provide you with the relief that you need. Once you’ve made the decision to file for bankruptcy and start fresh, you may wonder who exactly pays for bankruptcies? Where does all of that money go?  

Bankruptcy Pays for Itself

Filing for bankruptcy isn’t completely free. So, oftentimes, bankruptcy pays for itself. Between petition fees, liquidation of assets, and for some, repayments plans, a portion of the debt owed is paid through the bankruptcy process alone.

Cost of Personal Bankruptcies

Although the bankruptcy process does help pay for the debt, it typically only attributes a small portion of what was originally owed. So, the company that an individual owes money to usually has to absorb their losses. Sometimes, this can lead to the temporary raises in operating costs or a long term overall costs to consumers.

Cost of Corporate Bankruptcies

When a company files for bankruptcy the result can have societal impacts. Oftentimes, this results in job losses and increased prices of goods. So, when it comes to corporate bankruptcies, the employees and consumers are typically the ones who are helping pay for the debt through layoffs and a more expensive product.

Should I File for Bankruptcy?

Filing for bankruptcy can be a tough decision. With many options to weigh, bankruptcy may be the solution that you have been looking for. If you’re drowning in crippling debt and are unable to repay your debt in the foreseeable future, then bankruptcy can be the lifeline that you need.

Let Upsolve Help

If you’ve made the decision to file for bankruptcy, Upsolve can help. We offer a totally free online bankruptcy tool and access to expert bankruptcy attorneys for qualified individuals. If you do not qualify for our free services, we can also set you up with a knowledgeable, paid lawyer, and you’ll receive a free consultation before you file for bankruptcy. Complete our quick and easy form to see if you qualify for our free services. We look forward to helping you take back control of your finances and start fresh.



About the author
Rohan Pavuluri

Rohan Pavuluri is the CEO and Co-founder of Upsolve, the largest bankruptcy nonprofit in America. He graduated from Harvard College in 2018. He is also a member of the Legal Services Corporation’s Emerging Leaders Council, a Board Director at the National Access to Justice Center... read more

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Upsolve is a 501(c)(3) nonprofit that started in 2016. Our mission is to help low-income families who cannot afford lawyers file bankruptcy for free, using an online web app. Spun out of Harvard Law School, our team includes lawyers, engineers, and judges. We have world-class funders that include the U.S. government, former Google CEO Eric Schmidt, and leading foundations. It's one of the greatest civil rights injustices of our time that low-income families can’t access their basic rights when they can’t afford to pay for help. Combining direct services and advocacy, we’re fighting this injustice.

To learn more, read why we started Upsolve in 2016, our reviews from past users, and our press coverage from places like the New York Times and Wall Street Journal.

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