Why File Bankruptcy If You Don’t Have Any Money?
Bankruptcy is used by massive corporations to reorganize trillions of dollars of debts and property. Bankruptcy is Also used by working families who suffer an economic disruption like large medical bills. But finally, bankruptcy is used by persons experiencing homelessness as a way to remove barriers to being housed.
Individuals experiencing homelessness are not likely to have significant assets, so it may be difficult to understand the benefit of bankruptcy for an unhoused individual. The Bankruptcy Code has under-utilized sections that are of great benefit to low-income debtors.
Considerations for low Income Debtors
- A bankruptcy discharge can make a debtor eligible for public housing if they were ineligible due to an eviction
- A bankruptcy discharge can eliminate Social Security overpayments
- A bankruptcy discharge can eliminate a judgment for an uninsured motor vehicle accident and reinstate a driver’s license
- A bankruptcy discharge can stop a wage garnishment
- A bankruptcy discharge can remove a judicial lien
- If a wage garnishment resulted in a preferential payment to a creditor and the debtor can exempt the preferential payment, they can recover the preferential payment from the creditor
- The Bankruptcy Court can waive the filing fee
- Excellent pro se resources are available for simple bankruptcies
Any one of these benefits can be the fresh start needed to make self sufficiency a reality for someone experiencing homelessness.
ERLS hosts a bankruptcy clinic on the last Saturday of the month at the Downtown Sioux Falls Public Library. USD law student volunteers, under the supervision of an attorney, help clients draft pro se bankruptcies.
Filing bankruptcy is a serious decision. This blog cannot take the place of legal advice and outcomes cannot be guaranteed.