Can I file a Chapter 13 Bankruptcy for Free?

If you’re reading this now, the chances are high that you’re planning to file a Chapter 13 bankruptcy case soon, and I’m very sure that the question on how to file chapter 13 bankruptcy for free must have crossed your mind. We’ll answer that question shortly. 

Chapter 13 bankruptcy is designed to help those with a debt problem come up with an effective and efficient debt relief that won’t be detrimental to the finances of the creditor. If a debtor approaches the Chapter 13 bankruptcy court for debt relief, he/she can stop debt collection actions like wage garnishments, foreclosures, debt-collection lawsuits, and repossessions. The debtor can structure his/her payment schedule in a convenient way, as long as it’s not detrimental to the finances of the creditor. At the end of Chapter 13 bankruptcy, the debtor is debt-free. However, this does not apply to mortgage loans. 

However, as attractive as this debt relief plan is, what stops most people from applying for it is the cost of application. They’re worried that the cost of paying a bankruptcy lawyer to file a Chapter 13 case is too high; however, this is often based on assumption. 

The good news about filing for Chapter 13 bankruptcy is that you can go through the process without hiring the serves of a bankruptcy attorney, although it may be better to have one. 

How Can You File Chapter 13 for Free? 

The Bankruptcy Code gives room for filing a Chapter 13 bankruptcy case without an attorney. However, you must still pay $310 to the court as a filing fee. You will have to also pay for the two bankruptcy courses that you’re mandated to complete. 

The cost of completing a Credit Counseling Course and Debtor Education Course ranges between $10 and $50. You can take the courses in person, online or on the telephone. The United States Trustee’s Office has licensed lots of companies for this purpose; just ensure that you select a credit counseling or debtor education company that offers classes in your state. 

You can go online to download a bankruptcy form. However, there are many forms from the local government that a debtor needs to fill before filing a bankruptcy case. Chapter 13 bankruptcy forms are unique to bankruptcy districts; as such, you need to visit the nearest bankruptcy district office or check the website of your bankruptcy district to download a form. 

Some other costs that a debtor filing a Chapter 13 bankruptcy case without an attorney are the postage and travel costs. A debtor must either file a bankruptcy case in person or send it via mail, whichever method suits the debtor. 

Also, the debtor must notify each creditor and others that will be affected by the decision of the bankruptcy court about the bankruptcy case. 

Things to Consider before filing Chapter 13 without an Attorney:

There are some essential things you should consider before filing a Chapter 13 bankruptcy without an attorney, they are; 

  • Do you have knowledge of the different types of bankruptcy laws and how they may affect your case? 
  • There are different things to consider in each state. For example, if you were filing bankruptcy in Ohio, you would have different trustees than filing a bankruptcy in Washington state.
  • Can you use bankruptcy and case laws to argue your case before a judge if required to do so?
  • Do you know of the bankruptcy exemptions that are available in your state? If your state allows you to use a federal exemption, do you have adequate knowledge of the available federal exemptions? Bankruptcy exemptions are designed to protect some of your equity from liquidation by the court. 
  • Do you have adequate knowledge on how to complete your bankruptcy form, and do you know the forms to fill? 
  • Do you know of the requirements necessary for discharging a bankruptcy debt? 
  • Are you aware of how to calculate the mean test, and do you know how it affects your monthly payments? 
  • Do you know the legal requirements for calculating a Chapter 13 plan? 
  • Are you able to do the entire process without an attorney? For example, is there a chance that you would get your Chapter 13 dismissed and seek a refund.
  • Will you potentially need a personal loan while in a Chapter 13 bankruptcy? Do you know how you would handle that?

A bankruptcy lawyer is trained to provide adequate guidance, support, and legal advice to debtors who want to file for Chapter 13 bankruptcy. If creditors and the bankruptcy trustee should oppose your bankruptcy plan, you’re obligated to amend the bankruptcy plan and file the amended plan. 

If you don’t choose the right bankruptcy exemption, you may find yourself paying more than necessary for your bankruptcy discharge. If you have lots of money at stake, an attorney can help protect your equity in more ways than you can imagine.  Also, if you get into a Chapter 13, you may ask yourself later whether you can convert a Chapter 13  to a Chapter 7.

Alternatives to Chapter 13 Bankruptcy 

In some instances, it may be better to opt for an alternative. One common alternative that people go for is the debt settlement or debt management /credit counseling option, as it sometimes a much better option. If you come up with a detailed debt management strategy with your creditor, you may be able to have control over your finances without the hassle of filing for bankruptcy. You may also just need a debt payoff planner to help you get out of debt. This option would require no debt relief.

If you select something like a debt relief option, you will want to do extensive research before choosing that option. Why? Because there are some companies out there that may be more consumer-friendly than others. So, what do you do? I would recommend researching whether the company has solid BBB ratings, good Google and Yelp ratings, and any Reddit reviews that you can find (i.e. National Debt Relief reddit). This can give you a front and center view of what other people have experienced going through the program or experts that understand how the settlement system works.

Biography: Dave is a writer for the Saved by the Cents, The Bankruptcy Blog, and the Personal Finance Blog where he covers topics such as the Google sheets budgets and snow day predictors. In his free time, he likes to go on adventures with his family.

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