Coming to the decision to file for bankruptcy can be scary; it can also be expensive. How do you pay the filing fees and attorney fees if you are struggling to pay your bills? There is a way, if qualified, that you can file for bankruptcy for free. This will take research, patience and understanding your rights.
Basics of Filing
To file a bankruptcy, you must file in a federal bankruptcy court. There are 94 judicial districts in total across the United States, each with its own bankruptcy court. You have the option of filing:
– With an attorney, or
– Pro sé (without an attorney)
While filing without an attorney may seem like a cost saving option, it can be confusing if you don’t know the process or the law, and if mistakes or omissions are made in the paperwork, it can cause your case to be dismissed or debts to be challenged. The forms and steps for filing bankruptcy without an attorney are on the US Courts website. There are also resources available at low or no cost to evaluate your bankruptcy case if you are filing pro sé.
- US Courts Website – Filing Bankruptcy Without an Attorney & Bankruptcy Videos
- Department of Justice – Consumer Information
- Federal Trade Commission – Filing For Bankruptcy: What to Know
- Consumer Financial Protection Bureau – Bankruptcy Information
- National Association of Consumer Bankruptcy Attorneys – Should I file for Bankruptcy
- Texas Court Help – Resources in Texas
Filing without an attorney also does NOT automatically mean that your bankruptcy will be free. There are filing fees and other costs that will require payment unless you qualify for the fees to be waived. If your case is complex, you will want to consider an attorney to assist you to ensure that you have met the bankruptcy legal requirements.
Most clients choose to find a bankruptcy attorney in their area. There are attorneys that can assist you through the process “pro bono” (for free).
Step 1: Find the Right Attorney
Once you have decided you want to file for bankruptcy with an attorney search for attorneys that offer free consultations to discuss your bankruptcy case.
You can also contact Legal Aid to find a local office that can help with your case. They assist those that are at or below 125% of the poverty guidelines (in 2013 that was $14,363 for an individual, $29,438 for a family of four.)
According to the Legal Aid website, “Clients come from every ethnic group and every age group and live in rural, suburban, and urban areas. They are the working poor, veterans, homeowners and renters, families with children, farmers, people with disabilities, and the elderly. Women—many of whom are struggling to keep their children safe and their families together—comprise 70 percent of clients.”
Legal Aid is broken down into States. As an example, in Texas, there are 3 agencies that provide legal aid to all counties in Texas. Not every office offers the same services or types of legal aid, so if one office in your area does not offer these services, be sure to check out the other locations in your state. Offices are funded mainly through donations, volunteer time and expertise and can offer both criminal and civil law. Legal aid cannot take every case and usually cannot respond to emergency situations. However, any one that is unsure if they qualify are encouraged to call their local legal office to discuss.
Under the U.S. Bankruptcy code, agencies can be designated as Debt Relief agencies with the goal of assisting low income individuals with the bankruptcy process. You will have to show proof of income and qualify for a pro-bono (free) attorney. You can find some of the agencies who offer their services pro-bono at http://bankruptcyresources.org/. There may also be other individual bankruptcy attorneys who do probono cases as well.
Step 2: Ask if you Qualify for Free Mandatory Education
Individuals must complete mandatory financial education: one class prior to filing, and one class before discharging your case.
First, make sure that you are using a recognized and approved credit counseling service.
Services can be offered online, in person and by phone. Many of these companies, such as The Mesquite Group, offer free or reduced prices to eligible clients. Most of the time this will be extended with proper documentation and meeting the income eligibility requirements.
Step 3: Get Paperwork in Order
In order to file your case with the court, you will be required to pay the filing fees. These vary based on the chapter you are filing. The bankruptcy court can waive filing fees depending on the merits of the case. This is more likely in a Chapter 7 case than a Chapter 13 because the debtor typically does not have the means to repay their debts.
Bankruptcy Filing Fees – effective September 2012
Chapter 7 – $306
Chapter 13 – $281
Eligibility for waiving Chapter 7 filing fees include:
(a) income less than 150 percent of the poverty guidelineslast published by the United States Department of Health and Human Services (DHHS) applicable to a family of the size involved; and
(b) is unable to pay that fee in installments.
Nevertheless, you will need to compile all of your financial documents. You will have to prove that the debt is overwhelming and that you cannot pay it back. The paperwork is required before you go to the court and file for bankruptcy.
Step 4: Avoid future fees and costs
After filing your paperwork with the court, it will make a ruling on your bankruptcy case. It is imperative that you follow the ruling of the courts. If you have a Chapter 13 repayment plan, failure to maintain your payments can cause the case to be dismissed and pose the danger of losing your assets and reinstating your debt to the creditors.
With a Chapter 13 repayment plan, you will have a monthly Trustee payment that must be kept current.
If you find that you are continuing to struggle with the payment plan; contact your attorney. There are temporary assistance actions, such as an appeal to your payment plan or Interlocutory order that can assistant with your payment plan for up to 6 months. Any debts that were re-affirmed or debts that are secured such as your home or vehicle; must be kept current as well to keep you in good standing with the bankruptcy court.
Without acknowledging and changing your spending habits and budget, even those that have filed for bankruptcy relief can find themselves in financial trouble again. There are free and low cost resources all over the internet and in your community that can assist you with budgeting and financial education. For example; your banking institution, youtube.com, numerous blogs and websites as well as consumer credit agencies offer free tools and classes to assist you with your financial questions and budgeting needs.