Some people, though drowning in debt, are afraid of the stigma of bankruptcy and will turn to other means to help raise money to pay their bills. They may turn to crowdfunding as a solution. While using crowdfunding sites like GoFundMe to raise money might seem like a simple way to alleviate financial problems and let you get back on your feet, Tennessee residents should be aware that crowdfunding is not a guaranteed way to pull out of financial straits and might even cost you more out of your own pocket.

As Nerdwallet explains, crowdfunding presents a number of challenges. Some crowdfunding campaigns do not go beyond a person’s immediate circle of family and friends, and if you do not raise enough money from them, you would have to seek a wider audience of donors. To do so, you may have to spend money advertising your campaign, which can put you into deeper debt. In the end, you simply have no guarantee that you can raise enough money to pay your bills.

Another problem is that crowdfunding sites generally charge fees. You might expect a crowdfunding site like GoFundMe to levy a fee for using the site to raise money. Additionally, crowdfunding platforms typically have transaction fees on the money pledged to your campaign, so you do not receive every penny from your donors. You would have to research crowdfunding platforms to find the most inexpensive one for your campaign.

People may also be suspicious of your motives if you are the one heading the campaign. They might think you are running a scam, intending to pocket the money for frivolous expenses. Nerdwallet points out that many crowdfunding campaigns are actually started by a friend or family member of the person in debt. Many people feel more comfortable giving to a campaign if the person in need is not the one in charge of it.

Crowdfunding also does nothing to stop creditors from pursuing you or lessen the risk to your assets and property. Filing for Chapter 13 bankruptcy can put a halt to attempts by your creditors to collect on your bills. Without bankruptcy protection, every day you wait for your crowdfunding campaign to produce the needed funds can be agonizing, and if your campaign is ultimately a failure, you may have only delayed an inevitable need to declare bankruptcy.

Since the financial needs of Tennessee residents vary widely, do not consider this article as offering any legal advice. Its only purpose is to educate readers on the topic of Chapter 13 bankruptcy.