How Does $0 Money Down Bankruptcy Work? (If you Qualify)

$0 Money Down Bankruptcy — What It Really Means in North Carolina

A “$0 money down Chapter 13 bankruptcy” is a payment option that allows people to file immediately without paying upfront legal or court fees. This approach is designed for those who need fast protection from creditors but don’t have cash available before filing. Under this arrangement, your attorney files your Chapter 13 case right away, and both their fees and the court’s filing fee are rolled into your Chapter 13 repayment plan. You begin making monthly plan payments after filing, and part of those payments go toward your attorney’s approved fee, while the rest goes to your creditors. Because all Chapter 13 plans are reviewed and approved by the bankruptcy court, the attorney’s compensation is transparent and subject to local limits to ensure fairness. This allows you to get immediate bankruptcy protection—the automatic stay that stops creditor harassment, collection calls, wage garnishments, and seizure of assets—without needing to pay anything upfront.

Why $0 Down Chapter 7 Is Different (and Not Allowed in North Carolina)

It’s important to understand that $0 money down Chapter 7 bankruptcies are not allowed by the bankruptcy courts in North Carolina. That’s because once a Chapter 7 case is filed, all of your pre-petition debts are discharged—including any money you still owe your lawyer. If an attorney were to let you file a Chapter 7 case without paying anything upfront, then try to collect fees afterward, that debt would have already been wiped out in your bankruptcy—making the collection illegal. For this reason, ethical bankruptcy attorneys in North Carolina require payment of all Chapter 7 fees before filing your case. Some firms elsewhere have tried to get around this rule using “attorney-fee factoring” arrangements—where a finance company pays the lawyer upfront and then charges the client high-interest payments afterward. Courts in many jurisdictions have found these schemes improper, holding that they violate bankruptcy law and ethical rules because they involve unreasonable fees and interest rates bordering on usury. These arrangements also undermine the fresh-start principle of bankruptcy by leaving clients still owing debt tied to their legal fees.

The Safer, Court-Approved Option

By contrast, a $0 down Chapter 13 is fully court-supervised and ensures your payments are affordable and transparent. It’s a legitimate, court-approved way to file immediately, stop creditor harassment, and protect your property while paying for your bankruptcy over time through your plan. If you’re facing aggressive debt collection, threats of asset seizure, or constant creditor contact—and need immediate relief but can’t afford upfront fees—a $0 down Chapter 13 can provide both instant protection and a long-term financial reset, without resorting to risky or disallowed payment schemes.