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What If You Cannot Afford to File for Bankruptcy?

It may sound counter-intuitive, but some people cannot afford to file for personal bankruptcy. Ironically, filing for bankruptcy protection can be expensive. Most people need an attorney, they have to pay court fees, and they have to start paying debts they were able to avoid previously. All of this happens during one of the more stressful periods in a person’s life.

Spring…Into Bankruptcy

Many low-income families wait for spring to file for bankruptcy. No, it is not because of the renewal of life. It is because they wait for their tax return to be able to afford to file for personal bankruptcy protection. To many, bankruptcy is too expensive. You can plan to pay $1,500 to $3000 to file for chapter 7 bankruptcy protection. How can something be so expensive for someone who obviously does not have a lot of money?

Fees and Other Bankruptcy-Related Expenses

For chapter 7 personal bankruptcy, you can expect to pay (approximately):
• $250 for filing fees;
• $75 for administrative fees;
• $15 for the trustee surcharge;

Also, if you are one of the unfortunate souls that have to re-open their chapter 7 bankruptcy case, you can expect a $260 “re-opening fee”.

Now, for the attorney fees. Attorneys are a major asset when it comes to turning your life around and they are paid well for it. The American Bankruptcy Institute between 2005 and 2009 which stated that the average attorney fee for chapter 7 bankruptcy is $1072.

If you cannot afford that, what are your options?

Resources for Low or No-Income Families

Every state has law firms that will take on a certain number of “pro bono” cases each year. A simple Google search can show you which ones are available. However, it would be useful to understand your situation first. If you are not financially and/or legally savvy, you should seek out a firm that offers debt relief education and counseling.
Another option is to represent yourself as a “pro se” debtor. This can be labor-intensive, error-prone, and risky so be sure to do your research if you choose this route.

Additionally, you can look into filing for Chapter 13 personal bankruptcy. This has less up-front fees and it could give you up to 5 years to pay your debts. However, you should be leery of an attorney that seems overly eager to push you into a chapter 13 agreement. While, as stated, the up-front costs are lower, in the long run, you could end up paying much more as it is a longer process.

What You Should Not Do

You have options, but one of those options is not to do nothing. Debts do not pay themselves and lenders are tenacious. Being financially overwhelmed is not something you have to live with for the rest of your life. The sooner you take action, the sooner you can move on with your life.

The South Florida Debt Relief and Education Foundation focuses its resources, skill, and experience on the people that need it most. They provide education, counseling, and representation for low or no-income people and families in South Florida. For more information on how the Foundation can help you, visit http://www.debtreliefeducation.org/.

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