Should ‘No Money Down’ Chapter 7s Be Allowed?

A push to ease big up-front costs of Chapter 7 bankruptcy is gaining attention as proponents seek to change bankruptcy law to help the worse off financially avoid a more painful restructuring.

The American Bankruptcy Institute’s Commission on Consumer Bankruptcy has been asked to help with the effort to find a way for attorneys to file Chapter 7 cases without being paid all their fees up front, as is now the practice. Only Congress can change the Bankruptcy Code.

The issue is important for debt-ridden consumers who’d benefit more from Chapter 7, but who can’t afford a lump sum advance ...