Bankruptcy Help for Low Income

Claiming bankruptcy is designed as a way out for people in extreme financial difficulty, overburdened with financial obligations that they are not able to meet.  However, filing bankruptcy can be surprisingly expensive.  Thankfully, for low income persons, there are options to make it a possible and beneficial choice. The following article will offer some information on bankruptcy help for low income individuals.

Different Types Of Bankruptcy

There are two different Chapters in the U.S. Bankruptcy Code that apply to individuals, but Chapter 13 is actually a consolidation and repayment scheme that is only available to those who have enough disposable income to make monthly payments towards repaying a portion of their debts over a period of  3-5 years.  If you are in a low income situation, Chapter 7 will likely be what you are considering.

A Chapter 7 bankruptcy claim is specially designed for people with lower incomes as it liquidates any assets that you might have then discharges your debts.  You should be advised that not all debts are able to be discharged, such as:

•    Child support and alimony obligations
•    Fines and penalties for breaking the law
•    State or federally-funded student loans

In order to be eligible to file for a Chapter 7 bankruptcy, you must pass a Means Test which takes into consideration your income, assets, and expenses.  If your current monthly income is less than the median income for a comparable household in your state, then you pass the test.  However, if not, you must calculate your amount of disposable income.  If it is too high, you may be eligible to file under Chapter 13 but not under Chapter 7.  Just because you earn a significant amount of money does not mean that you will not qualify for Chapter 7, as you could have a lot of expenses to pay out each month.  There are plenty of online means test calculators that are easy to use as they take into consideration the state where you live and automatically calculate your eligibility based on the figures you provide.

Saving Money On Your Bankruptcy Claim

Filing for bankruptcy can be expensive but there are a few ways you can keeps the costs down.

1.    Do it yourself – it is always a good idea to consult a qualified bankruptcy attorney for detailed advice before filing for bankruptcy, but if money is tight and you are good at wading through confusing paperwork then filing for bankruptcy on your own could be a good option to help you save as much as $2,000 in legal fees.

2.    Get cheaper help- if you are not confident enough to try filing on your own, or if you have a complicated case, a little bit of research could result in a bankruptcy service company, or Bankruptcy Petition Preparer who cannot give advice but can quickly and accurately complete and file your paperwork. There are even reputable cheap bankruptcy attorneys available if you know where to look.

3.    Waive the fee- the fee to file for bankruptcy is about $300 but if you go before a judge and explain your case, it could be waved right there.

4.    Shop around- in some states you have 30 days from the date of filing your petition to take a Debtor Education Class.  These can cost approximately $50 but by shopping around you should be able to find one for about $15.

Filing for bankruptcy benefits low income persons by wiping out debts to create a fresh start, but it also has other benefits, such as:

•    Stopping harassment from debt collectors, and/or wage garnishing.
•    Restoring utilities, including water, gas, electric, and trash services.
•    Making you eligible for The United Supplemental Nutrition Assistance Program (SNAP)
•    Helping you qualify for your states prescription drug assistance program

Chapter 7 bankruptcy is a way for people with lower incomes who are struggling with an excessive amount of debt, to rid themselves of it and start again.  It can be an expensive process, but following a few simple tips can make it more affordable and accessible to those in need.  Regardless of how you ended up in financial difficulty, bankruptcy could be the answer.  Please take the time to schedule a free initial consultation with a reputable bankruptcy attorney so that you can fully understand the process and how it will help your individual financial situation.

For more on bankruptcy help for low income individuals and for a more information about the personal bankruptcy process, please feel free to browse through our site. We also offer a free bankruptcy evaluation for those who want to be connected with a reputable bankruptcy attorney in their local area.

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