If someone was to ask if whether or not you could afford to file bankruptcy, you might think it was a trick question. After all, bankruptcy is a tool for those who are financially insolvent and can’t afford to resolve their debts. While bankruptcy is designed to help those in financial hardship, not everyone can afford to file.
A new study, conducted by the National Bureau of Economic Research, has found that many Americans are “too poor” to file for bankruptcy. The study estimates a range of 200,000 to 1 million Americans considering bankruptcy cannot actually afford to file their case. Why? Filing fees and lawyer costs may put bankruptcy out of reach.
The average Chapter 7 case can cost a debtor up to $300 in court fees and upwards of $1500 for a bankruptcy attorney. While these fees don’t sound like much compared to the benefits provided by a bankruptcy filing, many people lack the cash flow necessary to pay for such fees. A study conducted by Columbia University found that 200,000 people would not have been able to file for bankruptcy last year without the help of their tax refund check.
These studies reveal some interesting facts about the financial state of many Americans, but it doesn’t mean that filing is impossible. There are a few ways to find help with your bankruptcy case. First, find a pro bono attorney, or one who offers flexible payment plan options. If you are filing for Chapter 13 you may be able to roll your lawyer fees into the repayment plan. Second, request a fee waiver with the court. There are instances in which the court will waive filing fees for certain Chapter 7 cases. Last, borrow the money to file from a family member.