Between 200,000 and 1 million Americans this year are so down-and-out they don't even have enough money to file for bankruptcy, a new study finds. The average cost of filing for Chapter 7 bankruptcy protection is about $1,500—$300 just for the paperwork fees in court and the rest to pay for a lawyer, reports Yahoo! Finance. Bankruptcy is considered a "last financial lifeline" and without it, destitute Americans are seeing their debt snowball.
The price of declaring bankruptcy has risen since the passage of the 2005 Bankruptcy Abuse Prevention and Consumer Protection Act, which aimed to decrease bankruptcies by adding obstacles. The bankruptcy rate did slightly dip, but only because "the people with lower incomes can't afford to file," said the study's co-author. A notable study finding: Bankruptcies rose after people received tax rebates. People short on cash often have no other way to pay for the filing. (More bankruptcy stories.)
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