How to File Bankruptcy With No Money
How Can I File Bankruptcy at Low or No Cost?
Bankruptcy on a Tight Budget
There are two out-of-pocket costs to bankruptcy:
- Lawyer’s fee
- Court filing fees
You can avoid lawyer’s fees two ways: File your own bankruptcy or find a lawyer whose time will not cost you anything.
You can avoid filing fees by asking the court for a fee waiver.
Avoiding Lawyer’s Fees
You can file your bankruptcy petition on your own, which will avoid any lawyer's fees. However, filing on your own a risky strategy.
Most self-created and filed bankruptcy petitions are not successful. Virtually all lawyer-produced bankruptcy petitions succeed. Why? Bankruptcy law is among the most technical specialty areas of law. It's easy to make a mistake with bankruptcy paperwork, which will cause the court to dismiss the case.
Bankruptcy lawyers are specialists. They learn bankruptcy law inside out. Bills.com recommends readers filing bankruptcy to do so with a lawyer's assistance to have the best chance of success.
If you can't afford a lawyer, then consult with a local organization that helps low- and no-income consumers find low- and no-cost legal services. See the Bills.com article Where to Find No-Cost Legal Aid if You Have Low or No Income. Help may be available, but you need to ask for it.
Struggling With Debts?
Unsure how to handle your debt? Use the Bills.com Debt Coach tool to receive a free analysis of all your debt resolution options. It’s free!
Avoiding Bankruptcy Court Fees
Bankruptcy courts provide options to people who cannot afford filing fees.
For example, if your income is below a certain amount, the court may waive your filing fee altogether.
Even if your income does not qualify you for a fee waiver, the court may allow you to pay your fee in installments rather than a lump sum. Discuss filing fee options with your lawyer.
Bills Action Plan
You may be able to file for bankruptcy at little or no cost. Take the following steps:
- Make sure you understand the difference between a Chapter 7 bankruptcy that discharges your debts and a Chapter 13 bankruptcy where the court will supervise a repayment plan.
- Look at all your bankruptcy alternatives, including credit counseling and debt settlement.
- Meet with a legal aid organization in your area, to see if you qualify for free attorney assistance.
- Research whether you are eligible to have the bankruptcy filing fees waived.
Struggling with debt?
If you are struggling with debt, you are not alone. According to the NY Federal Reserve total household debt as of Quarter Q4 2023 was $17.503 trillion. Student loan debt was $1.601 trillion and credit card debt was $1.129 trillion.
A significant percentage of people in the US are struggling with monthly payments and about 26% of households in the United States have debt in collections. According to data gathered by Urban.org from a sample of credit reports, the median debt in collections is $1,739. Credit card debt is prevalent and 3% have delinquent or derogatory card debt. The median debt in collections is $422.
Collection and delinquency rates vary by state. For example, in Idaho, 14% have student loan debt. Of those holding student loan debt, 6% are in default. Auto/retail loan delinquency rate is 3%.
While many households can comfortably pay off their debt, it is clear that many people are struggling with debt. Make sure that you analyze your situation and find the best debt payoff solutions to match your situation.
