Filing Bankruptcy While on Limited Fixed Income

Filing for bankruptcy if you live on a limited, fixed income is not necessarily any different than what other people face when filing bankruptcy. Let's face it, if you are drowning in debt it always feels like you are living on a low fixed income and that you never have enough money to make ends meet.

When you are so behind on your bills that you are considering bankruptcy, one of the hurdles you have to cross is figuring out how to pay the attorney fees and court expenses related to filing the bankruptcy. Everything seems overwhelming.

What are Your Options?

First, don't panic. There are lots of organizations out there who offer free or very low cost legal service. When you are considering bankruptcy, one of the very first things you should do anyway is to call a bankruptcy attorney. When you make those calls, find out about their fee structure and if they accept payment plans. Remember that particularly attorneys who specialize in bankruptcy understand that you are facing financial difficulty and will do their best to work with you.

If you file Chapter 13 bankruptcy, your attorney fees can often be included in the sum you are paying back over time with a court supervised repayment plan.

Credit Counseling

Many people who are considering bankruptcy think they are too far into debt to benefit from credit counseling, but not only are they wrong they are often surprised to learn that completing a credit counseling program can be a requirement for filing for bankruptcy. Since that is the case, ask the attorney that you are going to call about credit counseling agencies that are available to work with fixed income clients. Who knows? Maybe you can avoid bankruptcy with proper financial training and a plan.

Bankruptcy Basics

Understand the basics of bankruptcy so that you can make an informed decision about whether or not filing is right for you.

There are two common types of personal bankruptcy, Chapter 7 and Chapter 13
Chapter 7 liquidates your assets (with the exception of a few state allowed exemptions - check your local laws with your attorney) to pay your debts
Chapter 13 reorganizes your debts into a court supervised, multi-year repayment plan
Some debts don't go away with bankruptcy. These include court ordered fines, back taxes, student loans, and child support. Often a better choice for people with low incomes but who own a home or car they want to keep.
Just because you are married doesn't mean both spouses need to file bankruptcy
Bankruptcy is a negative mark on your credit report for up to 10 years
If you have a job with a security clearance, are in the military or you work in a financially sensitive position you could lose your job

Get Legal Help

An experienced bankruptcy attorney can help you decide if this step is right for you, and can help you figure out a way to pay for it. Don't rely on advice from a well meaning friend; this is an important decision. Savvy legal advice can ensure the best possible outcome and give you the fresh start you are hoping for.

Think Bankruptcy Might Be for You?