What If I Cannot Afford To File For Bankruptcy?

The concern about affording the costs associated with filing for bankruptcy is common and understandable. While it might seem paradoxical to pay for bankruptcy when you’re already in financial distress, there are various ways to manage these costs, and understanding them can help alleviate some of your concerns.

Costs Involved in Bankruptcy

1. Filing Fees: Filing for bankruptcy involves a fee. For Chapter 7, the fee is $338, and for Chapter 13, it’s $313 as of 2024. These fees can change, so it’s essential to check the current rates.
2. Attorney Fees: The cost of hiring a bankruptcy attorney varies widely depending on your location and the complexity of your case. While it’s possible to file on your own (pro se), having an attorney can significantly increase the chances of a successful outcome.

Managing Bankruptcy Costs

1. Payment Plans: Many bankruptcy attorneys offer payment plans, allowing you to pay their fees over time. However, in a Chapter 7 case, you’ll typically need to pay the full fee before filing since debts to your attorney would also be wiped out in the bankruptcy.
2. Pro Bono Services: Some attorneys provide pro bono services or reduced fees for low-income clients. You can check with your local bar association or legal aid society to find such services.
3. Filing Fee Waiver: If your income is below 150% of the federal poverty line, you might qualify for a waiver of the Chapter 7 filing fee. The court will require you to fill out a form to apply for this waiver.
4. Chapter 13 Consideration: If you can’t afford the upfront costs of Chapter 7, Chapter 13 might be an option. In Chapter 13, attorney fees can often be included in your repayment plan, spreading the cost over three to five years.
5. Saving: If bankruptcy is not an immediate necessity, you might have time to save up for the costs. Setting aside a small amount regularly can help you accumulate the necessary funds.
6. Prioritizing Expenses: If you’re considering bankruptcy, it might be time to reassess your budget and prioritize your spending, potentially freeing up funds to cover your bankruptcy costs.

Considerations Before Filing

• Credit Counseling: Before you can file for bankruptcy, you’re required to complete credit counseling from an approved agency, which might have a fee. However, fee waivers or reductions are often available based on your financial situation.
• Financial Assessment: Ensure that bankruptcy is the right choice for your financial situation. Sometimes, other debt relief options might be more suitable and cost-effective.

While the costs associated with filing for bankruptcy can be daunting, especially when you’re already facing financial difficulties, various options and resources can help make it more manageable. It’s crucial to explore all available avenues, such as payment plans, legal aid, and filing fee waivers, to find a solution that works for your financial circumstances. Consulting with a bankruptcy attorney during a free or low-cost initial consultation can also provide clarity on your options and help you make an informed decision.

Bankruptcy Filing Fees