Filing for bankruptcy protection too expensive for many

INDIANAPOLIS (WISH) - It can help keep the repo man from taking your car. It can keep you in your home on the verge of foreclosure. But a recent study shows bankruptcy protection is out of reach for many of those who need it most.

With medical bills mounting, filing for bankruptcy was the safety net unemployed Jake Pappas said he needed.

“Creditors want their money. I had gotten so far behind, I just felt trapped,” Pappas said. “It was really the only way out.”

Pappas filed for Chapter 13 bankruptcy protection.

But a new study conducted by a group of professors from Columbia University, the University of Chicago and Washington University in St. Louis estimates hundreds of thousands of Americans can’t afford the cost to file for protection from creditors. The researchers estimated another 200,000 consumers who would otherwise not have enough money to file will use their tax refunds to pay for bankruptcy this year.

Now, those struggling are finding different ways to pay the expense.

“A large number of those Americans actually use those tax refund checks to pay bankruptcy filing fees,” said 24-Hour News 8 Financial Analyst Peter “Pete the Planner” Dunn. “So it’s a really strange turn of events.”

Andrew Sawin, an attorney with Sawin, Shea & Des Jardines Bankruptcy Law Office in Indianapolis, knows the story all too well.

“When the laws changed, things became more complicated, meaning we had to charge more because the process is longer and more complex,” Sawin said.

The average cost to file for Chapter 7 bankruptcy is more than $1,500.

Sawin, who has practiced in Indianapolis for more than a decade, said fees have always been a major obstacle for clients.

“We try to work with people as best as we can to create payment plans to make it affordable,” Sawin said. “We often discount our prices.”

Dunn said anyone considering bankruptcy should first ask themselves if that is the best option for them and their family.

“(Bankruptcy) is a great tool for those who really need it,” he said, noting it doesn’t clear problems overnight.

Dunn also suggested interviewing attorneys to determine who can represent you best. .