Filing for bankruptcy is often a last resort for individuals overwhelmed by debt. Some people find it ironic that bankruptcy itself comes with costs. Court filing fees, attorney fees, and administrative expenses can make it seem impossible to file when you’re already struggling financially. You’re not alone if you’re wondering how to file for bankruptcy with no money. Fortunately, there are ways to navigate bankruptcy, even with little or no money.
However, looking at this process ignores whether the person who wants to file bankruptcy NEEDS to file bankruptcy or if filing bankruptcy will provide them with any meaningful benefit. That topic can be complicated. It’s nearly impossible for anyone other than an experienced bankruptcy attorney to understand that although someone may want to file bankruptcy, they may be overly optimistic about what bankruptcy can do for them. Bankruptcy was not a program designed to help the poor or impoverished. Going back to the early days of bankruptcy, this legal procedure was established to help merchants manage their businesses during lean times and to provide “a fresh start” to facilitate ongoing business activity. That Bankruptcy helps individuals eliminate overwhelming debt is secondary to this original purpose.
This guide will ONLY explain the options available to help you file for Bankruptcy when you cannot afford to pay for it. It can’t answer the question if Bankruptcy will solve your financial problems.
Understanding the Costs of Filing for Bankruptcy
Before exploring how to file for bankruptcy with no money, it’s important to understand the typical costs involved:
1. Filing Fees
- Chapter 7 Bankruptcy: The filing fee is $338.
- Chapter 13 Bankruptcy: The filing fee is $313.
2. Attorney Fees
- Chapter 7 attorneys usually charge between $1,000 – $2,500.
- Chapter 13 attorneys often charge between $2,500 – $5,000, but they may allow payment plans.
3. Additional Costs
- Credit counseling & debtor education courses (required before and after filing): Around $10 – $50.
- Other administrative fees may apply in some cases.
Bankruptcy is designed for people with debt problems, the system provides options to help those who cannot afford to pay these costs “upfront.” Let’s explore how you can file for bankruptcy even if you don’t have money available to pay these required costs.
How to File for Bankruptcy with No Money
If you’re struggling with the costs of filing for bankruptcy, consider these options:
1. Apply for a Fee Waiver
If you’re filing for Chapter 7 bankruptcy and can’t afford the $338 filing fee, you may qualify for a fee waiver. To be eligible:
- Your income must be below 150% of the federal poverty level.
- You must demonstrate that you cannot afford the fee in installments.
You can request a fee waiver by filling out Form B3A (Application to Have the Chapter 7 Filing Fee Waived) and submitting it to the bankruptcy court. The Court will review your financial situation and will grant the waiver if you provide the evidence that you are eligible for it..
2. Pay Filing Fees in Installments
If you don’t qualify for a waiver, you can request to pay your bankruptcy filing fee in installments.
- You must file Form B3B (Application to Pay the Filing Fee in Installments).
- The Court usually allows up to four payments within 120 days.
Paying the filing fee in installments can be a great option if you can’t pay the full amount upfront but can manage smaller payments over time. However, many people who obtain an approved application to pay their filing fees in installments never complete the required payments. As a result, their case is dismissed, and any money that they have paid towards the fees is forfeited – gone!
3. Find a Pro Bono Bankruptcy Attorney
Hiring an attorney can be expensive, but it is possible to obtain a free (pro bono) lawyer to help with your case. Here’s where to look:
- Legal Aid Societies: Many nonprofit organizations offer free legal assistance to low-income individuals.
- Local Bar Associations: State and county bar associations often have pro bono programs.
- Law School Clinics: Some law schools have student-run bankruptcy clinics supervised by experienced attorneys and professors.
Search for legal aid in your area through LawHelp.org or the Legal Services Corporation.
Since pro bono legal work is charity, expect to meet rigorous financial qualifications and wait in line to get this help. The demand for charity legal work is high and laws do not guarantee anyone the right to free representation. The resources for pro bono representation often give preference to the elderly, the disabled, children, and those seeking protection from domestic abuse. As a result, the ordinary person who has lost their job and wants to file a Bankruptcy to eliminate credit card debt may not be a priority. In addition, pro bono cases often involve a political issue that a volunteer attorney supports or finds interesting or one where they are likely to receive publicity. Neither is likely to be the situation with a bankruptcy case.
4. Use a “Do-It-Yourself” Approach (Filing Without an Attorney)
If you can’t afford an attorney, you can file for bankruptcy pro se (on your own). While this is possible, it can be risky because bankruptcy laws are complex.
Here’s what you’ll need to do:
- Complete Bankruptcy Forms: You must fill out several forms accurately. These can be found on the U.S. Courts website.
- Take a Credit Counseling Course: You must complete this before filing. Approved providers are listed on the Department of Justice website. Fee waivers are available from many of these providers; however, the cost of the courses are usually modest.
- File the Paperwork with the Court: Submit your completed bankruptcy forms to the Court and pay the fee (or request a waiver/installments).
- Attend a 341 Meeting: This is a meeting of creditors where the bankruptcy trustee reviews your case.
- Complete and file the Certificate after taking a Financial Management Class: You must submit the certificate showing that you completed a second class relating to Bankruptcy in order to receive your Bankruptcy Discharge. If you don’t do this within the time frame the Court requires, your bankruptcy may be closed without a Discharge. As a result, you receive no benefit from going through the process of Bankruptcy.
While filing without an attorney saves money, it increases the risk of mistakes that could result in your case being dismissed or being refused a Discharge.
5. Seek Assistance from a Bankruptcy Petition Preparer
If you’re comfortable filing without an attorney but need help with the paperwork, you can hire a bankruptcy petition preparer (BPP).
- They are not attorneys but can help you complete the forms for a small fee.
- They cannot provide legal advice or represent you in Court. Some may do so anyway, and because they lack education in the law, the advice they provide may cause you significant harm.
- Fees typically range from $100 – $300— which is much less than attorney fees.
Make sure the preparer is reputable and complies with bankruptcy regulations. An easy way to tell is if they ask you “not to say” what they have done or told you to do. Their job is only to type papers, not inflating their egos by pretending to be an expert about Bankruptcy.
6. Consider Chapter 13 Bankruptcy if You Have a Steady Income
If you have some income but can’t afford Chapter 7 fees upfront, Chapter 13 may be an option.
- You don’t have to pay large attorney fees upfront—they can be included in your repayment plan.
- You can set up a 3 to 5-year repayment plan to manage debts.
Chapter 13 requires you to have regular income. You must stick to the court-approved repayment plan.
Alternative Options If You Can’t Afford Bankruptcy
If you find filing for bankruptcy is still out of financial reach, consider these alternatives:
1. Negotiate with Creditors
Some creditors may be willing to settle for a lower amount or set up a payment plan.
2. Debt Settlement Programs
Debt settlement companies negotiate with creditors to reduce your total debt. Be cautious—many charge high fees and will harm your credit. Also, you generally will pay the companies operating these programs more than you would pay an Attorney to file a Bankruptcy for you.
3. Credit Counseling Agencies
Nonprofit credit counseling agencies can help you explore debt management plans (DMPs) as an alternative to bankruptcy.
4. Crowdfunding or Community Assistance
Some individuals have successfully raised funds through GoFundMe or other crowdfunding platforms to cover bankruptcy costs.
Final Thoughts: Can You File for Bankruptcy with No Money?
If you’re wondering how you file for bankruptcy without money, you have options. Whether it’s applying for a fee waiver, seeking pro bono legal assistance, or filing on your own, you can still access the bankruptcy process even if you can’t afford the upfront costs.
Before deciding, research your state’s rules and consider speaking with a legal aid organization or financial advisor. Bankruptcy is a big step, but it can offer the financial relief you need to start fresh. But understand that Bankruptcy has limitations. If you file Bankruptcy, you must make your car payments to keep your car and make your mortgage payments to keep your home. After you file bankruptcy, if you don’t pay your living expenses, the power company can turn off your electricity, the water company can turn off your water, your car insurance can be canceled, and so on. Bankruptcy will only eliminate debts made before you filed your case.
FAQs:
1. Can I file for bankruptcy if I have no money?
Yes, you can file for bankruptcy even if you have no money. Options include applying for a fee waiver, filing fees in installments, seeking help from pro bono attorneys, or filing pro se (without an attorney).
2. How do I get my bankruptcy filing fee waived?
Qualifying for a Chapter 7 bankruptcy fee waiver requires your household income to be below 150% of the federal poverty level. You must also prove you can’t afford to pay in installments. To do this, you must submit Form B3A (Application to Have the Chapter 7 Filing Fee Waived) to the Court.
3. Can I pay the bankruptcy filing fee in installments?
Absolutely. If you can’t pay the full amount upfront, you can request to pay in installments by filing Form B3B (Application to Pay the Filing Fee in Installments). Courts typically allow up to four payments over 120 days. However, the Court will dismiss your case if you don’t make every payment on time.
4. Do I need a lawyer to file for bankruptcy?
No, you can file for bankruptcy without a lawyer (pro se). However, bankruptcy laws are complex, and mistakes can lead to your case being dismissed or cause other problems. If you can’t afford a lawyer, consider seeking help from legal aid organizations, law school clinics, or charity from a pro bono attorney.
5. Where can I find free legal help for bankruptcy?
You can find free or low-cost legal assistance through:
- Legal Aid Societies
- State and Local Bar Associations
- Law School Bankruptcy Clinics
- Nonprofit organizations like Legal Services Corporation (LSC)
Visit LawHelp.org to find free legal aid near you.
6. What if I can’t afford an attorney but need help with paperwork?
You can hire a bankruptcy petition preparer (BPP) to help complete your forms at a lower cost. However, they cannot provide legal advice or represent you in Court.
7. Can I file for Chapter 13 bankruptcy if I have no money?
Chapter 13 bankruptcy requires a steady income because you must follow a court-approved repayment plan. The plan can include attorney fees, so you don’t need to pay the entire legal fee upfront. However, if you have no income, Chapter 13 may not be an option or even a good idea.
8. What are the risks of filing for bankruptcy without money?
If you file without a lawyer or pro se, you risk:
- Filling out the forms improperly can result in your bankruptcy case being dismissed. If you make a mistake, there may be other repercussions. The truth is that most people filing bankruptcy pro se make many mistakes.
- Losing property you could have protected. While you may believe you have “no property,” the bankruptcy trustee can take your tax refund, money held in a joint account with someone else, even if the funds “aren’t really yours” and other things you may not appreciate are considered to be ”property.”
- Failing to meet court deadlines could result in your bankruptcy being dismissed and you being ineligible to file again.
Obtaining free legal help can reduce these risks.
9. Can I file for bankruptcy online for free?
You cannot file for bankruptcy entirely for free unless you qualify for a fee waiver. However, in some jurisdictions, you can download free bankruptcy forms from the U.S. Courts website and even file them electronically.
10. Are there alternatives to bankruptcy if I have no money?
Yes, alternatives include:
- Negotiating with creditors for lower payments.
- Debt settlement programs (be cautious of fees).
- Credit counseling agencies offering debt management plans.
- Crowdfunding or community financial assistance.
- Doing nothing. Frankly, for most low-income individuals, doing nothing is often the best choice.
Conclusion: Should You File for Bankruptcy with No Money?
It’s important to understand whether filing for Bankruptcy will provide you with meaningful financial help. Filing Bankruptcy to eliminate a few thousand dollars in debts may come with associated costs, such as increased car insurance premiums and a lower credit score that exceed any value you receive by filing Bankruptcy.
A mistake you make, such as failing to list an asset or a debt you decided to “leave off” your Bankruptcy, can result in repercussions you can’t imagine. Is this something you are willing to learn about “the hard way?”
Many benefits of Bankruptcy, such as refinancing your vehicle at it’s fair market value rather than keeping it at its current balance, aren’t available unless you are represented by an attorney.
Are there small actions you can take that protect you and your family without filing Bankruptcy? You won’t know if other options might be better if you file Bankruptcy with no money.
