How do you pay for chapter 7 bankruptcy if you are broke? It’s a common dilemma. How does someone without money get the money together to pay a lawyer? Below I have five ways that past clients have used to pay my fees.
Filing Chapter 7 Bankruptcy requires that you pay your attorney fees up front. There are no zero money down options like in Chapter 13 Bankruptcy. In addition, attorney fees aren’t exactly cheap either. The law is complex, constantly changing, and the consequences of mistakes are severe. So, how do you pay for chapter 7 bankruptcy?
Use a tax refund
Many people use their entire tax refunds to catch up on credit cards and medical bills. Unfortunately a tax refund is usually not enough to completely pay off all the debt. It may be enough; however, to pay for attorney fees and still have some left over to pay for household goods. The biggest drawback to using a tax refund to pay for Chapter 7 bankruptcy is that it only comes around once a year. You may not be able to wait if facing repossession or garnishment.
Sell things (buy sell trade, craigslist, garage sale)
The next suggestion is simple – sell stuff you don’t absolutely need. There are some types of property that you can’t keep in Chapter 7 bankruptcy anyway. These are called non-exempt assets. You might as well sell it if you are just going to end up losing the asset to a Chapter 7 Trustee anyway.
Borrow from family
Borrowing money from family to pay for Chapter 7 bankruptcy is actually very common. A large percentage of my clients get help from family to pay for legal fees. You can pay them back after the bankruptcy is done. Just don’t pay them back before you file.
Cash out a retirement or get a retirement loan
If you are lucky enough to have some money set aside in a retirement account, you may be able to cash some of it out. Some employers will let employees take out a 401(k) loan which has to be paid back.
Save up the money
Saving to pay for Chapter 7 bankruptcy is easier said than done. The concept here is that you set money aside instead of paying your creditors like medical bills or credit cards. One danger is if there is already a civil judgment, this can put you at risk of garnishment.
What if you have nothing left to sell and don’t have the ability to save?
You may feel stuck if you can’t save or borrow the money and you have nothing left to sell. Fortunately, if you have regular income like a full time job, Chapter 13 Bankruptcy may be a good option because it requires zero money down.
If you’ve wondered how do you pay for Chapter 7 Bankruptcy, please give us a call at 785-727-2099 for a FREE Consultation over the phone, in person or you can contact us online.