For many people facing severe financial hardship, bankruptcy can be a lifeline. It provides a legal way to relieve debt burdens and start afresh. However, a significant concern for many is how to file for bankruptcy with no money.
If you’re considering bankruptcy but you have no cash on hand, is filing still an option? Here’s what you need to know.
How Bankruptcy Is Helpful
Bankruptcy offers a structured way to manage or eliminate overwhelming debt. Here are some of its key benefits:
Automatic Stay
Once you file for bankruptcy, an “automatic stay” goes into effect immediately. This means creditors must stop their collection efforts, including lawsuits, wage garnishments, and phone calls. This provides you with some breathing room to sort out your finances.
Debt Discharge
Depending on the type of bankruptcy you file (Chapter 7 or Chapter 13), you could have most or all of your unsecured debts discharged. This includes credit card debt, medical bills, and personal loans.
Asset Protection
Certain types of bankruptcy allow you to keep essential assets like your home and car, ensuring that you can maintain a basic standard of living while you work through your financial difficulties.
Why Bankruptcy Is Not Free
It’s essential to understand that filing for bankruptcy involves costs, which can be challenging if you’re already struggling financially. Here are some of the typical expenses:
Filing Fees
Both Chapter 7 and Chapter 13 bankruptcies require filing fees. The fee for Chapter 7 is approximately $350, while Chapter 13 is just over $300. These fees are due when you submit your bankruptcy petition to the court.
Credit Counseling and Debtor Education Courses
Federal law requires you to complete credit counseling before filing and debtor education after filing. These courses usually cost between $20 and $100 each, depending on the provider.
Attorney Fees
While it’s possible to file for bankruptcy without a lawyer (pro se), the process is complex, and any mistakes could be costly. Attorney fees for bankruptcy cases typically range from $1,000 to $3,500, depending on your case’s complexity and your location.
What You Can Do If You Don’t Have Much Money
If you’re in desperate need of filing for bankruptcy but can’t afford the associated costs and fees, there are several options to consider:
Fee Waivers
If your income is below 150% of the federal poverty level, you may be eligible for a filing fee waiver for Chapter 7 bankruptcy. You will need to apply for the waiver and demonstrate your inability to pay.
Payment Plans
Many bankruptcy attorneys offer payment plans, allowing you to pay their fees in installments. Additionally, some courts may permit you to pay your filing fee in installments, making it more manageable over time.
Pro Bono Legal Services
Non-profit organizations and local bar associations sometimes offer free legal services to those who can’t afford them. Look for pro bono bankruptcy programs in your area or contact your local legal aid office for assistance.
Borrowing from Friends or Family
While it may be uncomfortable, borrowing money from friends or family members could be an option. Explain your situation and how bankruptcy will help you get back on your feet.
Filing for bankruptcy can be a daunting process, especially when you’re strapped for cash. However, various strategies can help you manage the costs associated with it. If you’re considering bankruptcy but worried about the costs, we can help. Contact R. Flay Cabiness, II, P.C. at (912) 417-5041 (Brunswick, GA); (912) 809-2141 (Hazlehurst, GA) or; (912) 324-3176 (Jesup, GA) to schedule a consultation.
