Should I get a loan to file Bankruptcy in New York City?

Bankruptcy protection should be used in good faith.  Consumers should make every reasonable effort to pay back debts before looking to bankruptcy.  No one should intentionally incur more debt before filing, and our law firm would never encourage someone to do this in New York City- even in the case of taking out a small personal loan to fund your bankruptcy.  Understandably, people on the verge of bankruptcy may not have the cash on hand to hire an attorney.  The situation can seem desperate, but finding a creative way to pay for your bankruptcy fees is much better than adding to your debt troubles right before filing.

If you borrow money right before filing bankruptcy the creditor will likely challenge your ability to discharge this debt and even force you to pay it back.  There is an presumption in bankruptcy courts in New York that any debts incurred or charges made within 90 days of the filing date are considered to be nondischargeable.   The same goes for cash advances made 70 days prior.  Realize that if you borrow money to pay for a bankruptcy there is a small chance you will be required to repay that particular debt in full.

So while you could technically get away with taking out a loan to pay for a bankruptcy, unless you can prove you intended to pay it back, this strategy could backfire.  Instead of incurring a debt that you have no intention of repaying and thereby making the hole much worse for yourself consider some alternatives with your bankruptcy attorney.  Arrange a free consultation and discuss your financial troubles including your difficulty to pay for the bankruptcy.

Many bankruptcy attorneys in New York will be willing to work with you on regular payment plan to fund your bankruptcy.  While the legal fees will need to be paid in full before filing your case, your attorney may be willing to start taking your creditors calls while you are making the payments.  This can at least provide some temporary relief while you focus on saving some cash for your bankruptcy.  At this point many of our clients will look to borrow a little from their retirement accounts, or may ask friends or family to help them with the fees.  If all else fails even biting the bullet and finding a temporary job is usually a much better option than taking out a loan to pay for your bankruptcy.

Bankruptcy protection is the most powerful debt relief tool available, but it needs to be approached in the right way.  Incurring more debt for the sole purpose of paying for a bankruptcy will usually fail.  If you think you need bankruptcy help speak to an attorney.  It’s their job to evaluate your financial situation and to help you find relief from you debt troubles.  This can include advising you on a creative way to pay for your bankruptcy.  Struggling to afford a bankruptcy is quite common, and we see it in our offices in Manhattan all the time.  If you are overwhelmed with debt and being harassed by your creditors, please contact the Law Offices of William Waldner online or by calling 212.244.2882.  We offer free consultations and help our clients in New York find low impact ways to pay for their bankruptcies.  As of 9/31/16 we maintain a 99% Chapter 7 discharge record in New York City while providing affordable bankruptcy assistance for all New Yorkers.

This article is intended for educational purposes only.  By reading this article no attorney-client privilege has been created.