Too Broke to File for Bankruptcy? You’re Not Alone

With the average cost of filing for Chapter 7 bankruptcy protection costing more than $1,500, an estimated 200,000 to 1 million consumers are not financially able to file for bankruptcy each year. Another 200,000 people are expected to use their tax refunds to cover the costs of filing for the most common form of bankruptcy available. Federal courts charge $300 just to file for bankruptcy, while the majority of costs go to bankruptcy lawyers. Other costs include fees for required pre-bankruptcy credit counseling and a debtor education course, together totaling $85. Because of the costs associated with filing for bankruptcy, finding a cheap bankruptcy attorney is essential.

2005’s Bankruptcy Abuse Prevention and Consumer Protection Act raised the cost of filing by adding more requirements like more paperwork, credit counseling, and education, in an effort to reduce the number of filings. While the bankruptcy rate has fallen slightly, from 1.4% in 2004 to 1.3% in 2011, the average income of people filing has increased. This suggests that many consumers that are too poor to file are not able to, while middle class consumers can afford the fees.
If you cannot afford a bankruptcy attorney, try to find a pro bono lawyer who will provide legal services for free. However, only a small amount of consumers are able to secure a pro bono lawyer. Trying to file for bankruptcy on your own is strongly cautioned against, due to complicated laws. Plus, a dismissed bankruptcy case hurts your credit score just as much as a completed one.
A bankruptcy attorney may suggest that you stop paying your creditors if you’ve been making some payments, so as to free up funds to pay for attorney fees. If you haven’t had enough money to pay creditors, consider asking friends or family members to pay for a cheap bankruptcy attorney in Las Vegas, sell some belongings, or take a second job as long as it doesn’t affect your ability to get bankruptcy protection.
Main photo by Casey Konstantin