What Happens If I Can’t Afford to Pay for Bankruptcy Proceedings?

 Filing for bankruptcy can be a necessary step for individuals and businesses struggling with overwhelming debt. However, the costs associated with bankruptcy—such as court fees, attorney fees, and administrative expenses—can be a major concern, especially when financial resources are already stretched thin.

If you are wondering whether you can afford to file for bankruptcy or what options are available when funds are limited, this guide will help you understand:

• The costs of filing for bankruptcy
• Alternatives if you can’t afford to pay for bankruptcy
• Low-cost and free legal assistance options
• Strategies to cover bankruptcy costs

Understanding the Costs of Bankruptcy

The cost of bankruptcy varies depending on the type of bankruptcy you file and whether you hire an attorney.

Filing Fees

Each bankruptcy chapter has different filing fees:

• Chapter 7 Bankruptcy: $338
• Chapter 13 Bankruptcy: $313
• Chapter 11 Bankruptcy (for businesses): Can range from $1,738 to thousands more, depending on the complexity

In addition to the filing fees, there may be additional costs, such as:

• Credit counseling fees (usually $10–$50)
• Debtor education course fees (typically $10–$50)
• Administrative and trustee fees

Attorney Fees

Hiring a bankruptcy attorney can be expensive but is often recommended to ensure your case is handled correctly. Average attorney fees:

• Chapter 7 Bankruptcy: $1,000 – $3,500
• Chapter 13 Bankruptcy: $3,000 – $6,000
• Chapter 11 Bankruptcy: Can be tens of thousands of dollars, depending on complexity

If you cannot afford these costs, there are alternatives available.

What If You Can’t Afford to File for Bankruptcy?

If you don’t have enough money to cover the costs of bankruptcy, consider the following options:

1. Apply for a Fee Waiver

The court may waive the filing fee for Chapter 7 bankruptcy if you qualify as a low-income filer.

Eligibility for a Fee Waiver

• Your household income must be below 150% of the federal poverty guidelines.
• You must prove that paying the fee would be a financial hardship.

To apply, file Form 103B (Application to Have the Chapter 7 Filing Fee Waived) with the court when submitting your bankruptcy petition.

2. Request to Pay Filing Fees in Installments

If you can’t pay the full bankruptcy filing fee upfront, you may request to pay it in installments. Courts typically allow up to four payments over a period of 120 days.

To apply, file:

• Form 103A (Application to Pay Filing Fee in Installments) along with your bankruptcy petition.

This option is only available for Chapter 7 and Chapter 13 bankruptcies.

3. Find a Pro Bono Bankruptcy Attorney

Some attorneys and legal aid organizations offer free or low-cost legal representation for those who qualify based on financial hardship.

Where to find free legal help:

• Legal Aid Organizations: Contact your local Legal Aid Society or National Legal Services Corporation (LSC) office.
• State Bar Associations: Many state bar associations have pro bono programs.
• Nonprofit Organizations: Groups like Upsolve and Volunteer Lawyers Network assist low-income filers.
• Law Schools: Some law schools offer free legal clinics where supervised law students help with bankruptcy cases.

4. Use a Bankruptcy Petition Preparer

If you cannot afford an attorney, you may use a bankruptcy petition preparer (BPP). These are non-lawyers who help complete paperwork at a lower cost, usually $100–$300.

However, they cannot provide legal advice or represent you in court.

5. File for Bankruptcy Without an Attorney (Pro Se)

Filing for bankruptcy without an attorney (pro se) can save money, but it comes with risks:

• Mistakes in paperwork can lead to case dismissal.
• You may not know how to maximize exemptions to protect assets.
• Creditors may challenge your case, and without legal help, you might lose.

If filing pro se, use resources like:

• Bankruptcy court websites (they provide official forms and instructions).
• Upsolve.org, a free nonprofit tool for low-income Chapter 7 filers.

6. Seek Assistance from a Nonprofit Credit Counseling Agency

A nonprofit credit counseling agency can help review your finances and suggest alternatives to bankruptcy.
They may help:

• Negotiate lower payments with creditors.
• Develop a debt management plan (DMP) to avoid bankruptcy.
• Guide you through low-cost bankruptcy filing options.

Other Ways to Afford Bankruptcy Costs

If you do not qualify for a fee waiver or free legal assistance, consider these options:

1. Use Your Tax Refund

If you expect a tax refund, use it to cover bankruptcy costs before filing.

2. Sell Unnecessary Assets

Selling items you no longer need (electronics, furniture, jewelry, etc.) can help cover fees.

3. Borrow from Family or Friends

If possible, ask family or friends for a loan to cover filing costs. However, do not repay them before filing, as bankruptcy courts may see it as a preferential payment.

4. Work Out a Payment Plan with an Attorney

Some bankruptcy attorneys offer payment plans, allowing you to start with a down payment and pay the rest over time.

For Chapter 13 Bankruptcy:
Attorney fees are often included in your repayment plan, meaning you can file with little or no upfront cost.

Alternatives to Bankruptcy

If you cannot afford bankruptcy, explore alternative debt relief options:

1. Debt Settlement

Negotiate with creditors to settle for a lower amount. This can work for large, overdue debts but may damage your credit score.

2. Debt Consolidation

If you have multiple debts, consider a debt consolidation loan to combine them into one lower payment.

3. Hardship Programs

Some lenders offer hardship programs that temporarily reduce or pause payments.

4. Negotiating Directly with Creditors

Many creditors prefer to work with you rather than force bankruptcy. Call them to request:

• Lower interest rates
• Extended payment terms
• A reduced lump-sum settlement

Final Thoughts

Filing for bankruptcy can be expensive, but you have options if you cannot afford the costs. Consider applying for a fee waiver, setting up installment payments, seeking free legal aid, or working with a nonprofit credit counseling agency.

If bankruptcy is the best solution for you, don’t let cost be a barrier—many resources are available to help you file and regain financial stability.