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How to pay for bankruptcy filing fees

For many Michigan consumers, making the decision to file for personal bankruptcy is the hardest step in the process. However, once the decision to file has been reached, the next hurdle is determining how to pay for the filing and legal fees associated with the process. In many cases, by the time a consumer has decided to file for bankruptcy, his or her financial position is tenuous, and there may be no funds available to cover the costs of filing.

Some individuals may wonder if they can take out a small personal loan to cover the costs of filing, and if that debt can then be discharged within the bankruptcy process. It is important to understand that bankruptcy laws are in place to allow individuals and businesses to eliminate debt that they cannot pay, not to eliminate charges or purchases that they have no intention of repaying. As such, intentionally taking out a loan to fund one's bankruptcy with the intent of discharging that debt during the process is not only ethically questionable, it is also not permitted under bankruptcy law.

A better alternative would be to fund the bankruptcy process through picking up an additional part-time job or side work, or asking friends and family to help. In some cases, it may be possible to take out a small loan to fund a bankruptcy filing. However, the borrower must be clear with the lender about the reason for the loan, and then adhere to the provisions for paying that funding back.

It can be daunting to consider picking up a new expense when one's finances are already in distress. However, filing for personal bankruptcy can give Michigan consumers a fresh start, and can greatly reduce the financial pressures that led to the decision to file in the first place. It is well worth the effort required to find the funding necessary to start that process, and begin building toward a brighter financial future.

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

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