How do I File Chapter 7 Bankruptcy with No Money?
Filing for bankruptcy can be daunting, especially when you're short on funds. It can feel like a Catch-22. If I am insolvent, how do I file for Chapter 7 Bankruptcy, especially with no money?
Afford bankruptcy with no money is a issue I see a lot on forums like Reddit (which is an okay resource for learning more about BK). The answer is actually pretty straightforward if you have any income source. The first thing to know is that you can consult with an attorney to determine if filing bankruptcy makes sense and if you’re eligible. Do not do anything without first getting answers on this. Secondly, you can discuss attorneys fees as well as court fees during your consultation. Third, you and the attorney can work out a strategy that includes a payment plan.
The key thing to remember is that you are basically trading the above-mentioned fees in order to discharge crushing debt and stop creditor harassment.
Common Strategies
Stop Paying Unsecured Creditors
Let me start by saying that you really need to discuss this with your attorney before going down this path. This blog post is not advising you to do this, so speak to an attorney.
It really doesn’t make sense to continue paying unsecured creditors (and debt consolidation outfits) if the underlying debt is subject to a full discharge in a Chapter 7 Bankruptcy. This is also true if you’re paying one unsecured creditor while giving other creditors nothing, which is another thing a debtor probably should not do.
Technically, you would stop paying on unsecured debts.
Yes, it is possible to owe both unsecured as well as secured debts to the same creditor, though this is somewhat rare. Credit Unions often cross-collateralize debts, making them all effectively secured. Refer to your contract(s) with your credit union to see if this applies to you. If you’re not able to tell, your attorney will be able to tell.
There are some moving parts here.
You might get sued (and have a judgment entered against you) if you stop paying creditors, especially if you don’t file a bankruptcy petition, or if your case (post-filing) gets dismissed. That said, these situations are fact and to some extent jurisdiction-specific.
Creditors files lot of lawsuits, but their attorneys do not always make a mad dash to get a writ of garnishment after obtaining a judgment. Then again, some of them do.
Filing a response to a creditor lawsuit and appearing for bench trials is important. Just filing a response will buy a debtor at least some amount of time.
Chapter 7 Bankruptcy Payment Plan
Payment plans can be as brief as a month, or as long as six months—going beyond this range probably isn’t a great idea. So, on a straight-forward Chapter 7 Bankruptcy in Spokane, Yakima and the rest of Eastern Washington, an example of a Chapter 7 Bankruptcy Payment Plan might be as low as $185 per month over six months. It really depends on the fees involved, and your ability to pay them in a given payment window.
Pro Bono Clinics
There are some, like the Spokane Volunteer Lawyers Program as low-bono options like the Washington Moderate Means Program which could help you file for bankruptcy. If you qualify, and if resources are available, these are ways to get through the process. The VLP option might at least get you some free legal advice, assuming you qualify based on your income. It invariably will not result in you being represented by an attorney. However, if you do not have any money, and do not earn very much, these are resources that may be available to you.
Conclusion
Filing for Chapter 7 bankruptcy in Easter Washington State, without much money might seem like climbing a mountain without gear, but with the right preparation, knowledge, and use of available resources, it's entirely possible. By understanding the process and finding a good attorney, you can navigate this path to a fresh financial start. .
Schedule a free Zoom Bankruptcy Consultation with attorney John Spalding today to schedule a free consultation.
