Filing a Bankruptcy for Little or No Money

The new bankruptcy laws seem intimidating, they do make it tougher for people to file, but in some cases it can help the people who need it most to get out of debt. These laws allow people under certain incomes to file bankruptcy for free, including the credit counseling.

The "New" Bankruptcy Laws

Under the new bankruptcy laws people seeing a bankruptcy must attend a credit counseling session before they file their paperwork with the courts. The debtor (the person filing for a bankruptcy) will receive a certificate upon completing this counseling. This must be given to the court along with the necessary paperwork and a court filing fee.

Also the debtor must pass a means test, this doesn't test the debtor's book smarts, but their real need for a bankruptcy based on income and a comparison of income to expenses. This test is to protect creditors; if a person can afford to make payments the new laws will require the debtor to file chapter thirteen bankruptcy instead of chapter seven.

The final change by the new law is another credit counseling session to be completed after the Meeting of the Creditors, or the 341 meeting. The intention of this credit counseling session is to educate the debtor on ways to stay out of debt in the future and ways to rebuild their credit after the bankruptcy has been discharged.

Where Does The Free Come In?

If a person lacks the financial capacity to pay for the credit counseling and the court filing fees that person can apply for a Court Filing Fee Waiver, using a form with the same name (the link is provided in supporting links). If the person qualifies for the fee waiver they will receive a letter by mail from the bankruptcy court to that effect.

If not, the debtor may be sent a form to apply to pay for the court filing fee in installments. If this option is used, check the fine print, in many states the bankruptcy will not precede until the court filing fees are paid in full.

Qualifying for a Court Filing Fee Waiver will automatically qualify the debtor for a credit counseling fee waiver. A great website for this service is provided in the supporting links. The credit counseling can be completed over the internet. When this happens a credit counselor may call the debtor to confirm their completion of the credit counseling and notify the debtor that their certificate has been emailed to them. The debtor can then simply print the form and mail it to the bankruptcy court.