Can you be too strapped to file for bankruptcy?

If you are considering filing for bankruptcy, chances are that your financial situation is fairly unstable. Perhaps your debt is overwhelming or will soon become overwhelming. In this case, you may not even have enough liquid income to pay for bankruptcy filing fees, attorney's fees and related bankruptcy costs. At that point, you may not be wondering "Should I file for bankruptcy?" but rather "Can I afford to file for bankruptcy?"

It is possible to navigate this substantial financial challenge. Ordinarily, you may not generally place yourself in additional debt right before filing for bankruptcy simply because that debt will be covered by bankruptcy. But the law does generally protect loan acquisitions for the purposes of paying for your attorney's services and related bankruptcy fees. Should you have any questions about this process, it is best to ask a prospective bankruptcy attorney about the legality of taking out a loan to cover his or her services.

If you do secure a loan to cover your attorney's services, that loan provider will generally be considered another creditor for the purposes of your bankruptcy. Your prospective attorney may also have a manageable payment plan for you to enroll in or offer alternative payment options. Attorneys who regularly work with bankruptcy filers generally understand the financial straights that struggling consumers find themselves in and chances are that they can help see you through the process.

In the end, bankruptcy serves to enable individuals and families with mounting debt to regain control over their financial situations. Failure to file for bankruptcy when needed can land you in an even deeper financial hole than you are in now. Please contact an experienced bankruptcy attorney if you have questions about how to afford bankruptcy filing. Chances are that he or she can help you make it work.

Source: Fox Business, "Should I Take out a Loan to File for Bankruptcy?" Justin Harelik, May 1, 2013