What if I can’t afford to file bankruptcy?

The actual court fee you have to pay when filing bankruptcy is not very expensive, and you might be able to get help with it if you need it. The more expensive part is hiring a bankruptcy attorney to guide you through the process and handle filing your case.

The cost of filing a Chapter 7 bankruptcy in southern California, for example, is only $338, and even less for a Chapter 13 bankruptcy ($313). But if even that would be a hardship, you might qualify for a fee waiver that will let you pay the court fee in installments.

The cost of a bankruptcy attorney is an additional expense you have to pay because filing on your own is not feasible or wise. In southern California, for example, the average cost is around $1,560 for a Chapter 7 (see this article on Lawyers.com) case and anywhere from $3,300–$5,000 for a Chapter 13 case (see this article on Lawyers.com). If you can’t manage those fees because you’re low-income, you may be eligible to get free legal help. See a listing of State Legal Aid Resources at FindLaw.com. In southern California check with the Legal Aid Society of California or the San Diego Volunteer Lawyer Program.

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One of the worst myths out there about bankruptcy is the assumption there’s no way you can get a car loan if you need one after filing bankruptcy. People end up paying what little cash they can scrape together for a horrible car that ends up being more trouble than it’s worth. Please know it is possible to get a car loan in spite of a bankruptcy, but you have to find the right kind of lender who offers a bankruptcy car loan.

It’s true that many lenders won’t approve a car loan for you if you have a bankruptcy case open or even if it’s discharged for a couple years. But there are other lenders who will work with you on a bankruptcy car loan. The interest rate on the loan is going to be higher, but that’s the extra price you have to pay for being what lenders think is a higher-risk customer.

Related post: 12 Bankruptcy Myths Busted

Most people understand very little about bankruptcy, which is why some resist filing bankruptcy even when it would be the best thing for them to do. One of the biggest myths out there is that people just assume filing bankruptcy means they’re going to lose everything. Not true!

Bankruptcy laws were designed to help you either eliminate or catch up on your debts, and to do so while making sure you get to keep what you need, including your house, a vehicle to drive, your retirement fund, and all the basic personal possessions you need.

But if you have tons of debts and also have lots of assets that don’t fall within what the courts think you need, then they’re going to want to sell those off to pay the creditors you owe. Bankruptcy laws get very complex around what assets you’re allowed to protect and keep, and which ones would be liquidated to pay off some or all of your debts. And this also varies from state to state. This is why you need the guidance of an experienced, reputable bankruptcy attorney to guide you through the process.

Related post: 12 Bankruptcy Myths Busted

Many people resist filing bankruptcy even when they should because they think it’s a sign of failure. How you view your bankruptcy is your choice.

A lot of people assume filing bankruptcy is a sign of failure because they assume the person filing has been irresponsible. That may be true for some, but there are just as many who are forced to file bankruptcy through no fault of their own.

There are many reasons people file bankruptcy. If you lose your job in the middle of an economic recession, bankruptcy might become your best option. Others might get hit with giant medical bills they weren’t expecting, and bankruptcy might be their only option even if they have health insurance. Everyone’s situation is different, and plenty of people who file bankruptcy not because of any kind of failure on their part but because of circumstances beyond their control.

In many cases, filing bankruptcy is the most responsible thing you can do to get your financial life back on track. Bankruptcy laws were designed to help people get out from under crushing loads of debt and make a fresh start. Instead of viewing bankruptcy as a failure, you can view it as a new beginning to make things better. The choice is yours.

Related post: 12 Bankruptcy Myths Busted

People filing for bankruptcy often ask this question: Will bankruptcy ruin my credit forever? The short answer is no, but it is a little more complicated than that. Here’s what you need to know.

When you declare bankruptcy, it does stay on your credit report for anywhere from seven to ten years depending on the type of bankruptcy you filed. While that bankruptcy is on your credit history, some lenders may view it as a red flag, which in turn means you may find it difficult to obtain new loans or lines of credit. That’s the potential negative impact of bankruptcy on your credit.

But there are also lenders who have specific lending programs designed to meet the needs of bankruptcy customers. You’ll likely have to settle for higher interest rates because all lenders view you as a higher risk for default due to that bankruptcy on your credit report.

Whether your credit score goes up or down after filing bankruptcy depends on a variety of factors. If your credit score was already very low when you filed bankruptcy, then it might go up after your bankruptcy is discharged because you’ll have much less delinquent debt than before.

But however it works out, the most important thing is to start proactively rebuilding your credit as soon as possible after filing bankruptcy. That’s how you make the most of the fresh start bankruptcy was designed to give you.

Related post: 12 Bankruptcy Myths Busted