How can I File Bankruptcy With No Money?
Since filing for bankruptcy isn’t free, some people might put off filing for bankruptcy because they think they can’t afford it and this can result in their financial situation worsening. It’s ironic that someone who is bankrupt still needs money to file for bankruptcy.
On the brighter side, filing bankruptcy can actually help you save money.
Understanding Automatic Stay
The moment you file for bankruptcy, creditors are legally restricted from contacting you to request payment.
Why is this important?
Even though some people say they can’t afford to file bankruptcy, the truth is they still end up paying the most demanding creditors. Whether it’s 50, 100, or 200 dollars, Most debtors end up paying creditors to at least stop the calls for a period of time.
When creditors realize that you might be unable to pay the full debt you owe, they will pressure you to try and get whatever payment they can.
Since filing for bankruptcy will start an automatic stay, the money that would be otherwise sent to creditors to pacify them for a little while can be saved towards paying the bankruptcy attorney.
$0 Down Bankruptcies
Depending on the financial situation of the person, trying to gather funds for an attorney will take time, might be months or even years.
While it is very uncommon, some attorneys offer 0 Down Bankruptcy which allows individuals with limited financial resources to start the bankruptcy process without paying any upfront fees.
“$0 Down Bankruptcies” is a term commonly used by bankruptcy attorneys and law firms to describe a payment arrangement that allows individuals in dire financial straits to initiate the bankruptcy process without having to pay upfront legal fees.
This can be particularly helpful for those who are overwhelmed by debt and facing financial hardship but lack the means to cover the initial costs associated with filing for bankruptcy.
How to File Chapter 13 with no Money
Chapter 13 bankruptcy is often called “reorganization” bankruptcy and is available to individuals with a regular income, even if it’s low. It allows you to create a repayment plan based on your income and expenses.
Attorney fees can typically be included in a Chapter 13 repayment plan. In a Chapter 13 bankruptcy, you work with your attorney to develop a repayment plan that outlines how you will repay your creditors over a three to five-year period. This plan is subject to court approval, and it takes into account your income, expenses, and the types of debts you owe.
Attorney’s Fees as an Administrative Claim
Attorney fees are considered as an administrative claim in a Chapter 13 case. Administrative claims are debts that must be paid in full through the repayment plan. These debts are usually those that are entitled to special treatment under bankruptcy law, such as attorney and bankruptcy trustee fees.
Some bankruptcy lawyers will offer no money down to start your case. This does not mean that you won’t pay any money upfront. It means that the firm will accept your case and sign an agreement for representation with no money down, but you still must pay the legal fees prior to any action being taken on your case.
For many people, coming up with all the fees upfront is difficult. You should consider searching for an attorney who offers payment plans or that takes payments so you can break down the payments into affordable monthly payments.
When searching for the cost of a bankruptcy lawyer, most chapter 7 bankruptcy lawyers will not quote you a price over the phone. It’s extremely difficult to analyze a client’s case over the phone and quote a fee.
Most bankruptcy lawyers will offer a free consultation to talk about your case. You can use that to gauge the cost of the attorney’s fees.
Frequently asked questions
Can I file Bankruptcy Without a Lawyer?
How to File Bankruptcy Without a Lawyer; Filing for bankruptcy without a lawyer, also known as filing pro se, is possible, but it’s a complex legal process, and it’s crucial to proceed with caution. Here is a simplified overview of the steps to file for bankruptcy without an attorney:
Determine Your Eligibility
Understand which type of bankruptcy you qualify for (Chapter 7 or Chapter 13) based on your financial situation.
Gather Financial Documents
Collect all financial records, including income statements, tax returns, debt statements, and asset valuations.
Attend Credit Counseling
Before filing for bankruptcy, you are required to attend credit counseling from an approved agency. Make sure to complete this step and obtain a certificate of completion.
Obtain Bankruptcy Forms
Obtain the necessary bankruptcy forms from the official website of the United States Courts (www.uscourts.gov) or your local bankruptcy court’s website.
Fill Out the Forms
Carefully complete all required forms, including the bankruptcy petition, schedules, and statements. Be thorough and accurate.
Identify and apply the appropriate bankruptcy exemptions to protect your assets. Exemption laws vary by state.
Pay Filing Fees
Pay the required filing fees to the bankruptcy court. If you can’t afford the fees, you may request a fee waiver or installment plan.
File Your Petition
Submit your completed bankruptcy forms and any necessary supporting documents to the bankruptcy court. Make sure to follow the court’s specific filing instructions.
Attend the Meeting of Creditors
Attend the 341 meeting of creditors, where a bankruptcy trustee will ask you questions about your financial situation. Be prepared and bring the required identification and documents.
Complete the Financial Management Course
After filing for bankruptcy, you are required to complete a financial management course from an approved agency.
Comply with Court Orders
Follow any court orders or trustee requirements throughout the bankruptcy process.
Await Discharge or Repayment Plan Confirmation
In a Chapter 7 bankruptcy, if everything proceeds smoothly, you may receive a discharge of eligible debts. In a Chapter 13 bankruptcy, the court will confirm your repayment plan.
It’s essential to recognize that bankruptcy law is intricate, and even minor errors or omissions in your paperwork can have significant consequences.
Without legal expertise, you may find it challenging to navigate the process effectively.
An attorney can provide valuable guidance, ensure your paperwork is accurate, help protect your assets, and navigate the complexities of the bankruptcy process, increasing your chances of a successful outcome. If cost is a concern, many attorneys offer payment plans or options for clients with limited financial resources.
What is the Cheapest Way to File Bankruptcy?
The cost of filing for bankruptcy can vary depending on several factors, including your location, the complexity of your case, and whether you hire an attorney. If you’re looking for the cheapest way to file for bankruptcy, here are some cost-saving options:
File Pro Se (Without an Attorney)
Filing for bankruptcy without an attorney, also known as pro se representation, can save you attorney fees, which can be a significant cost. However, it’s essential to be cautious, as errors or omissions in your paperwork can lead to complications or even dismissal of your case.
Chapter 7 vs. Chapter 13
Chapter 7 bankruptcies are generally less expensive than Chapter 13 bankruptcies because they involve a more straightforward process and don’t require a lengthy repayment plan. If you qualify for Chapter 7, it may be the more cost-effective option.
Use Online Resources
Many online resources and self-help guides are available to assist you in completing the required bankruptcy forms and understanding the process. These resources are often more affordable than hiring an attorney.
Consider a Fee Waiver
If you cannot afford the bankruptcy filing fees, you may be eligible for a fee waiver. This can substantially reduce the upfront costs associated with bankruptcy.
Take a Credit Counseling Course
Before filing for bankruptcy, you are required to complete a credit counseling course from an approved agency. Some agencies offer these courses for free or at a reduced cost.
Explore Low-Cost or Free Legal Aid Services
In some cases, you may be able to access low-cost or free legal aid services provided by nonprofit organizations or legal clinics. These services can provide limited assistance with your bankruptcy case.
Chapter 7 Bankruptcy Clinic
Some law schools and legal clinics offer Chapter 7 bankruptcy clinics where law students, supervised by experienced attorneys, can assist you with your case at a reduced cost.
If you decide to hire an attorney, inquire if they offer payment plans or sliding-scale fees based on your income.
Seek a Free Initial Consultation
Many bankruptcy attorneys offer a free initial consultation. Take advantage of this to discuss your case and understand the potential costs involved before committing to hiring an attorney.
Be Efficient and Organized
Ensure you have all your financial documents and information organized and complete the required forms accurately to avoid any unnecessary costs or delays.