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Can I File for Bankruptcy with No Money?

If you’re deeply in debt, chances are you may be looking into bankruptcy as a way to relieve some or all of your financial burdens. However, bankruptcy comes with its own set of fees, and if you plan to work with an attorney to ensure your bankruptcy is filed correctly, you will incur attorney fees as well. It’s kind of a catch 22 – you’re thinking of filing for bankruptcy because you can’t afford your bills, but filing for bankruptcy will result in yet another bill. Therefore, you may be wondering if you can file for Chapter 7 or Chapter 13 bankruptcy if you don’t have any money.

If you have questions about filing for bankruptcy, contact our experienced Cleveland bankruptcy attorneys at Luftman, Heck & Associates today at (216) 586-6600. We will walk you through the process and explain every step along the way.

How to Pay for a Bankruptcy

You are not the only person to file for bankruptcy when you’re broke. However, many people are able to utilize bankruptcy to erase debts and get a fresh start. In order to process your bankruptcy, the bankruptcy court must charge a fee, and it cannot be completely waived. Often you can petition the court to have a payment plan set up for your fee, and the court may agree to allow you to make installments.

How your attorney gets paid is a little different, and often depends upon which plan you choose. In a Chapter 13 bankruptcy, your debts are gathered into a payment plan and you spend three to five years paying them off. Your attorney may ask that a portion of fees be paid up front, but the rest will be paid through the payment plan. While this payment method may seem like it is less burdensome, it can often mean that attorney fees cost you more than other plans.

In a Chapter 7 plan, all your attorney fees are paid up front. Unfortunately, a Chapter 7 bankruptcy attorney cannot offer a payment plan due to the structure of the bankruptcy. When you file, an automatic stay goes into place which stops everyone to whom you owe money from collecting on their bills. Once your bankruptcy discharge is awarded, most or all your debts are eliminated. Attorney fees are dischargeable debts in Chapter 7, so if an attorney does not collect fees before filing the bankruptcy, they run the risk of their fees being discharged and therefore never getting paid.

Are There Any Options?

It depends. While an attorney must be paid up front for a Chapter 7 bankruptcy, the attorney fees for this plan are typically more affordable than those in the Chapter 13 plan. The best way to determine what you can afford is to speak to a reputable Cleveland bankruptcy attorney. Luftman, Heck & Associates offer a free consultation with one of our capable attorneys to discuss your case and payment options.

Call us today at (216) 586-6600 or contact us online.