When You're Too Broke to Even Be Filing Bankruptcy


Consider the case of Jennifer, a single mother with three young children, a job that offers no health insurance, and child support coming in only off and on from an ex-husband who can't be depended on. Jennifer made less than $20,000 a year, but she had run up about $25,000 in credit card debts trying to care for her children's health taking them to hospitals when they needed it. She was someone who believed in paying her obligations and struggled hard for as long as she could to pay what she owed. But she struggled too hard and for too long. She didn't think about filing bankruptcy until she was completely broke. By then, she didn't have the $300 it took to file for Chapter 7; and she certainly didn't have the $1500 dollars that the attorney asked for. In short, she was too broke to even file for bankruptcy.

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Things used to be a lot easier prior to the year 2005. But the authorities began to see a trend in how people chose bankruptcy over trying to pay their obligations. They figured that filing bankruptcy was just too easy and people just casually chose this option and reneged on their responsibilities. If you happen to be in a position where you are an honest, but struggling citizen, and you find that you're too broke even for bankruptcy, what do you do? Luckily, there are a few options.

Your first option would be to seek a waiver of the court fees. There is a provision in the new law that allows people who are too broke for a Chapter 7 filing, to skip the $300 filing fee. This provision can't help you with your attorney's fees; but to save $300 is something. People tend to overlook how they do have a few hidden sources of funds that they can tap in an emergency such as this. They can for instance, break into their retirement fund. Of course, there will be a certain penalty, but with few options, this may sound like one of your better alternatives.

When you're there a shortage of funds, going with an attorney may seem like a luxury. You may be tempted to turn to a paralegal for filing advice and services, or you may be tempted to do the whole thing on your own. Even before the 2005 minutes to the law, filing bankruptcy used to be a terribly complicated process. As it stands now, there are all kinds of mistakes that you can make that you will be penalized for if you don't know what you're doing. Not even a legal aid society, the kind that provides legal advice to poor people, will come close to addressing people with a bankruptcy filing. If you have family who will help you, asking for a cash loan could be the way to go.

Finally, you could consider selling property that is not exempt. When you file for bankruptcy, you're allowed to keep a certain amount of property. Depending on the state you live in, you can keep about $3000 of equity in a car. If you find that you have any more value in your car than that, you could sell your car altogether and use the money for your bankruptcy expenses.


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