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What if You Can't Afford a Bankruptcy Attorney or the Fees?

Written by: Kristy Welsh

Last Updated: October 3, 2017

It is not uncommon for people who have been struggling for years to make minimum payments on their debts to suddenly find out they are too broke to pay a lawyer or pay the bankruptcy filing fees. As a result, people filing bankruptcy without the help of an attorney rose from 6 percent of Chapter 7 and Chapter 13 filings in 2015 to 8 percent of Chapter 7 filings and 10 percent of Chapter 13 filings in 2016. Some might think that is because people do not like lawyers but we tend to think this is a way for people to try to save what little money they have left.

Costs to File Bankruptcy

The bankruptcy filing fees effective January 1, 2017 are as follows:

  • Chapter 7 — $335
  • Chapter 13 — $310

The most common type of bankruptcy, a Chapter 7 filing, erases most consumer debts and typically costs anywhere between $1,500 to $3,000 with an attorney. Chapter 13 filing, which involves a debt repayment or reorganization plan, can cost from $3,000 to $4,000 with an attorney.

After the passing of the 2005 Bankruptcy Reform Act, costs for both types of bankruptcy filings rose considerably. This increase in cost was due to the imposed Means Test and other limitations on filing, which was a direct result of the 2005 Bankruptcy Reform Act.

Should You Use an Attorney to File Bankruptcy?

Now that you have finally made the decision to file bankruptcy, can you afford an attorney? If you can't, does it really matter if you don't use one? Well, like anything, having some expertise in something goes a long way in getting a project done correctly. A poorly filed bankruptcy can be dismissed, which means you will not get any relief from your creditors. On top of that, filing your bankruptcy incorrectly could leave some of your property and assets unprotected which could lead to you losing a lot of things you could have kept after the bankruptcy is finalized.

If you can somehow scrape the money together, it is always a good idea to seek expert advise. But before you go out and hire any Tom, Dick, or Harry Esquire, read our article on the 50 Questions to Ask When Looking for a Bankruptcy Attorney. This way, the little money you do have to pay an attorney, will not be wasted on some incompetent fly-by-night attorney who will do nothing for you except get you further into debt.

Alternative Options to Use

Before you start bankruptcy proceedings on your own, here are a few things to consider that will go a long way in saving your assets and some money.

  1. Figure Out If You Are Judgment-Proof.  If you are judgment-proof, you may not need to file bankruptcy and you can just send your creditors a letter telling them to stop contacting you. You are judgment-proof if:
    • Your income and property are legally protected from creditors.
    • You own very little and have no income.
    • All of your income is from Social Security - Social Security payments are legally protected.
    • The list of property you own is only clothing, household items, and a car worth $2,000 or less.
    There is a hitch in being judgment-proof. If your creditors go to the trouble to sue you and get a court judgment, they may be able to collect from you if your circumstances improve in the next 10 years. A bankruptcy filing, by contrast, would legally erase the debt.
  2. Think of Ways to Raise the Money Needed.  Your bank account might be empty, but there are some ways you can quickly raise the money you need to file bankruptcy and hire an attorney.
    • Cancel some luxuries such as cable TV, cell phone, or eating out. This will free up some money instantly.
    • Sell some items you are likely to lose in a bankruptcy, like a second car, expensive artwork, or jewelry, on eBay or Craigslist.
    • Stop making payments on debts you are hoping to erase in the bankruptcy - what's the point of paying on these if they are going to be discharged in your bankruptcy.
    • Get a loan from a friend or family member. The loan would be legally wiped out in the bankruptcy filing, but that wouldn't prevent you from repaying them later.
  3. Look For Low-Cost Bankruptcy Help.  Many bankruptcy attorneys offer discounted initial sessions. Use this session to explore whether or not filing bankruptcy is going to be right for you and what you will need to do to proceed with a bankruptcy filing.

    If your income is below the poverty level (currently $18,530 for a family of three), you may be eligible to receive free help from your local legal-aid society. There are also a few bankruptcy courts that have "pro se help desks" (pro se means filing without an attorney) so contact your local court and ask if they are offering this type of service.

Given how complicated today's bankruptcy procedures are, you should at least read as much as you can before you decide to file bankruptcy. Our website is loaded with information on Chapter 7 and Chapter 13 filings and the most popular questions asked regarding filing either one. We also have a Bankruptcy Forum where you can read questions and answers from other members and you can ask your questions for free. Doing you homework before jumping into filing bankruptcy will give you a much better chance for a successful filing and a brand new start .