Do ‘No Money Down’ Bankruptcies Help or Hurt Debtors?

The “no money down” bankruptcy, where debtors pay nothing in attorneys’ fees before filing for Chapter 13 bankruptcy, is a nationwide phenomenon reshaping the consumer bankruptcy system.

Chapter 7 bankruptcy, in contrast, requires the immediate payment of attorneys’ fees.

Though “no money down” might sound like a good idea to the broke consumer desperately thinking about filing for bankruptcy, empirical data from a recent national study suggests that “no money down” filers pay $2,000 more and have their cases dismissed at a rate 18 times higher than if they had filed Chapter 7. That means they don’t get the relief ...