Bankruptcy can be an expensive process. In the long run, a bankruptcy case can save you thousands of dollars. It is an investment in your future that will bring you an approximate immediate return. However, in the short term, you will need to pay attorney fees. Learn more about how to file for bankruptcy without money.
Take Advantage of Free Consultations
The first thing to remember is that many bankruptcy attorneys offer free consultations. A qualified bankruptcy attorney can look at your circumstances, help you determine if bankruptcy is right for you, what type of bankruptcy to file, the timing of the case, and how to pay for it. A good place to look for a qualified attorney is the National Association of Consumer Bankruptcy Attorneys.
Use Your Tax Refund
When tax refunds arrive in the spring, many bankruptcy attorneys see an uptick in people seeking information about bankruptcy. It is not ideal to treat the federal government like a savings bank. However, this egg can help you take advantage of eliminating heavy debts.
Stop Paying Your Credit Cards
This is sometimes referred to as “letting your creditors pay for your bankruptcy case.” Once you decide to file for bankruptcy, if you hold onto the money you would use to pay your unsecured creditors, you will have enough money after a few months to proceed with the bankruptcy case. Unsecured creditors are those who cannot seize property if you stop paying. Your car and home are secured debts, while credit cards and personal loans are typically unsecured.
Ask for Help from Family or Friends
Asking for help can be difficult. You may feel embarrassed when telling loved ones why you need money. Many people find that when they ask for help, they have more resources than they thought. Your attorney will need to know the source of the funds as it must be disclosed in your bankruptcy paperwork. If it’s a loan, that person must be listed as a creditor. The loan will be discharged in the case, but that doesn’t mean you can’t pay it back. If it’s a gift, it may need to be listed as income. Your attorney can advise you on this matter.
Make Bill Collectors Pay
If you are being harassed by bill collectors, they may be violating the Fair Debt Collection Practices Act or its equivalent in your state. If that’s the case, you can potentially be awarded $1,000 for each harassment case, in addition to actual damages, plus attorney fees and costs.
Reduce Expenses
If you haven’t already, now is the time to review your budget. Look for items you can cut back on and ways to decrease expenses. Many people can find a few extra hundred dollars each month without feeling overly stressed. Remember, your expenses will be listed in your bankruptcy case, at least generally. You don’t want to cut back too much and find yourself with an unworkable budget in the long run. Your attorney can help you figure out which expenses to cut back on.
Work with Your Attorney
Many bankruptcy attorneys may allow you to pay your Chapter 7 fees in installments, but they usually require that your fees be paid in full before filing the case. For Chapter 13 cases, attorney fees can be included in the monthly Chapter 13 payment. Some bankruptcy courts may allow a Chapter 13 case to be filed where you only pay attorney fees over a number of months, then convert the case to Chapter 7.
Note:
Chapter 7 is liquidation bankruptcy, which means your debts will be discharged (with some exceptions) and you will not have to pay them back. Chapter 13 is a wage earner’s plan, where you create a repayment plan that lasts from three to five years with your creditors.
Ways to Get Low-Cost or Free Help
If your income is low, or if you are unemployed, or if you have a disability, you may qualify for low-cost or free legal services. Check with your local legal services organization or legal aid society. Many local bar associations also provide referrals to lawyers who are willing to offer free or nearly free services to low-income individuals. Some law schools have legal clinics where law students work under the supervision of practicing attorneys.
What Not to Do to Pay for Bankruptcy
Here’s a list of last resort options. You should only consider these options if you are in a hurry to file. Speak with a qualified bankruptcy attorney before taking any of these steps as they may end up costing you more in the long run.
Obtaining More Credit
It’s best not to resort to loans to file for bankruptcy. If you take out a loan on a car, you are putting your vehicle at risk and will have to pay the car title loan company to release the vehicle. Redemption loans have high interest rates, and cash advances may not be dischargeable in bankruptcy. Any unnecessary debts you incur in the 90 days prior to filing for bankruptcy – or with the intent to include them in the bankruptcy – may not be discharged, and you may lose your right to discharge under certain circumstances.
Withdrawing Money from Your Retirement Accounts or Home Equity
This money will be protected (exempt) when you file for bankruptcy. If you use it to finance your case, you could face early withdrawal penalties or high tax bills. Home equity loans can put your home at risk if you struggle to make payments later. The downsides of this approach outweigh the benefits unless you owe large amounts of money that will be discharged.
Filing the Case Yourself
This is called filing a “pro se” or “self-represented” case. If you file without the help of an attorney, you may not successfully complete your case. This is especially true if there are opposing disputes and other complications. If you have any secured debts, you will have to handle reaffirmation agreements yourself and appear before a bankruptcy judge. If you have any non-exempt property, you will have to deal with the trustee. You may end up losing more money to your creditors by filing on your own than you would have paid an attorney in the first place.
Note: If you are considering bankruptcy, some of the options discussed in this article may not be suitable for your specific situation. It’s best to seek advice from a qualified bankruptcy attorney or at least an accredited credit counseling service first. You can start by consulting your state’s consumer protection office or visiting the U.S. Department of Justice website to find a list of approved credit counseling agencies.
Source: https://www.thebalancemoney.com/too-broke-to-file-bankruptcy-part-2-316187
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