How to Pay For a Chapter 7 Bankruptcy
Chapter 7 Bankruptcy fees must be paid up front, and can vary in price depending on the complexity of the case. So, inevitably someone wonders how to pay for a chapter 7 bankruptcy. There’s no secret but below I’ve outlined a few ideas.
Four ways to pay for a chapter 7 bankruptcy:
Save the money
This is the most obvious but least convenient method. It is extremely difficult to save for a chapter 7 bankruptcy while broke. Many people stop making payments on credit cards, medical bills, collection accounts or other unsecured debts. Some people also stop making payments on loans on property they were planning on giving back anyway (i.e. car payment, mortgage, etc). If you stop paying on the debts you will discharge anyway, this may clear up some free cash.
Borrow the money from friends or family
If you have friends or family willing to loan you money, you can pay them back after the bankruptcy is complete. If the money given was actually a loan (as opposed to a gift), the friend or family will be listed in the bankruptcy along with other bills. The legal obligation to repay them will be eliminated with the chapter 7 bankruptcy discharge.
There is no law against paying back debts that are discharged in the bankruptcy. Many of our clients get loans or gifts from persons they know and after the bankruptcy discharge they have more disposable income to make voluntary payments.
Sell any non-exempt assets you have
If you want to know what type of assets are non-exempt, click here. Non-exempt assets are not protected in a chapter 7 bankruptcy. This means the chapter 7 trustee can liquidate this asset or property for the benefit of the creditors. If you have an asset that will be liquidated in bankruptcy and you can sell it ahead of time for cash.
Borrow from, or partially liquidate, an “exempt” asset
In bankruptcy, some assets are protected and are not subject to liquidation. Retirement plans, for example, are generally protected, exempt assets. If necessary, you may be able to borrow from it or take a hardship withdrawal, depending on the plan’s rules.
“I’ve tried but I cannot afford to save for Chapter 7 Bankruptcy”
If you are getting garnished, or a creditor has a bank levy — then it’s time to consider Chapter 13 Bankruptcy. A Chapter 13 Bankruptcy will allow you to get a case filed with zero money down.
If you have questions about How To Pay For A Chapter 7 Bankruptcy, please give us a call at 785-379-3600 for a FREE Consultation over the phone, in person or you can email us now.
