How Do You File for Bankruptcy When You Are Broke?
If you are broke and in debt, filing bankruptcy could provide a solution to your problem. However, the typical bankruptcy can cost thousands of dollars, as you must generally pay court filing fees, attorney fees and possibly ancillary fees, such as document preparation fees. However, there are ways to avoid some of the costs of bankruptcy, particularly if you have little to no income.
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Stop Making Payments
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A common way for debtors to raise money to file bankruptcy is to simply stop paying certain bills. For example, if you have credit card debt, which typically is included in a bankruptcy discharge, you should consider stopping payments to those cards. You can then save the money you were previously using to pay those debts and use it to pay for your bankruptcy expenses instead.
Apply for a Fee Waiver
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The standard filing fee for a Chapter 7 bankruptcy is $299. If you can't afford to pay this fee, you can apply to the bankruptcy court for a fee waiver. You can only qualify for the Chapter 7 fee waiver if your income is less than 150 percent of the regularly-adjusted poverty line. Since you can't file Chapter 13 unless you have sufficient income anyway, there is no option to apply for a waiver of the $274 Chapter 13 filing fee.
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Find A Pro Bono Attorney
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If you hire an attorney, that cost is typically the most expensive part of your bankruptcy. Attorneys can charge thousands of dollars to represent you in your case. However, in certain cases you may be able to find an attorney who will take your case for free, or pro bono. The American Bar Association has a public service committee that offers a directory of pro bono programs. As with the bankruptcy court fee waiver, you are more likely to receive pro bono services if you have little income and are truly in need.
File Without An Attorney
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If you don't qualify for pro bono services or for the fee waiver, it may mean you have enough money to file bankruptcy on your own without an attorney, or pro se. By wiping out the most expensive bankruptcy cost, you are left with only the $299 filing fee. If you don't qualify for the waiver, you still may be able to pay it in installments, upon appeal to the court, for up to 120 days. If you spread the filing fee over four months, that averages just about $75 per month -- a worthwhile investment to discharge potentially thousands in debt forever.
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References
- U.S. Courts: Chapter 7 Fee Waiver
- U.S. Courts: Filing For Bankruptcy Without an Attorney
- American Bar Association: Directory of Pro Bono Programs
- Bankruptcy Law Network: How Much Does Filing For Bankruptcy Cost?; Karen Oakes; September 22,2010
- Bankruptcy In Brief: Before You File
- U.S. Courts: Bankruptcy Filing Fees
