How to File Bankruptcy With No Money
Filing bankruptcy can provide powerful financial relief and a fresh start. But many people don't file because they lack the funds to cover attorney and court fees. Fortunately, it is possible to file bankruptcy with little or no money through careful planning and money-saving strategies. This article explores low and no-cost bankruptcy options, as well as responsible ways to cut expenses and borrow funds to cover filing costs.
The primary obstacle stopping financially-strapped individuals from seeking bankruptcy protection is the inability to pay filing and attorney fees. But just because you lack money now does not mean bankruptcy is out of reach. With determination and resourcefulness, you can find ways to fund a bankruptcy so that you can eliminate unmanageable debts and get back on solid financial footing.
This article will explain the typical costs associated with bankruptcy. It will then provide money-saving tips and ethical options for covering those costs, even with limited funds. While bankruptcy should not be taken lightly, it can offer insolvent debtors a vital chance to reset their financial lives when used prudently.
Understand the Costs of Filing Bankruptcy
The two primary expenses involved in filing bankruptcy are court filing fees and attorney fees. Understanding these costs helps you budget and plan for them.
The court charges a filing fee when you submit your bankruptcy paperwork. For Chapter 7 bankruptcy, the current filing fee is $338. For Chapter 13, it is $313.
Attorney fees vary, but the average cost of legal services for bankruptcy ranges from $1,500-$3,000 depending on complexity. Hiring an attorney maximizes the benefits of bankruptcy.
Filing pro se (without an attorney) is an option but can be very risky if you lack legal knowledge. Attorney fees represent the major cost consideration for most bankruptcy filers.
Explore Low-Cost and Free Bankruptcy Options
If you simply cannot afford typical attorney fees, below are some ways to reduce, defer, or eliminate those costs:
Do it Yourself Filing
Filing pro se avoids attorney fees but comes with risks if you lack expertise. Educate yourself thoroughly before attempting this.
If you meet income qualifications, a legal aid clinic can provide free legal services.
Pro Bono Assistance
Some attorneys offer pro bono work for limited-income clients. Check with local bar associations.
Many attorneys work with clients on installment plans to spread legal fees over months.
Cut Expenses and Save for Bankruptcy
Reducing current expenses frees up money that can be set aside for bankruptcy costs.
Reduce Housing Costs
Look for a cheaper apartment or take in a roommate. Downsize if you own a home.
Lower Transportation Costs
Use public transit. Carpool if possible. Delay any vehicle upgrades.
Cut Discretionary Spending
Eliminate unnecessary expenses like cable packages, gym memberships, etc.
Ask Creditors for Hardship Programs
Explain your situation and try to lower minimum payments. Every bit helps.
With strict budgeting over a few months, you may save enough to cover bankruptcy expenses.
Borrow Money Responsibly
If cutting expenses cannot provide the needed funds, borrowing money in a prudent manner is preferable to struggling indefinitely without bankruptcy relief.
Borrow from Friends or Family
Ask a friend or family member for a personal loan. Offer to sign a promissory note.
**Credit Card Cash Advances **
A cash advance on a credit card can provide funds, if used judiciously.
Banks, credit unions, and online lenders offer installment loans that may be less risky than credit card debt.
Alternative Options if Bankruptcy Isn't Feasible
If bankruptcy costs remain out of reach, less optimal but still helpful debt relief options include:
Debt Management Plan
A DMP provided by a credit counseling agency can lower interest rates and consolidate debt into one payment.
A debt settlement company negotiates directly with creditors for reduced lump sum payoffs.
Taking out a debt consolidation loan to pay off credit cards saves on interest and eases management of payments.
The lack of cash to cover court fees and attorney costs shouldn't force you to prolong financial hardship. With practical saving strategies, responsible borrowing, and a willingness to explore low-cost bankruptcy resources, you can take action to repair damaged credit, erase unpayable debts, and regain control of your finances. Where there's a will to improve your situation, there is usually a way.