Do I Need a Lawyer To File Bankruptcy?
If you’re considering bankruptcy, you might be wondering if you need to hire a bankruptcy lawyer. Most lawyers are going to tell you it always makes sense go at least consult with an attorney whenever you have legal questions. If you’re considering bankruptcy and are wondering whether you should call a bankruptcy lawyer the short answer is yes! Anyone even considering filing bankruptcy should speak with an attorney in their State before filing. There are countless reasons for that which will be outlined in this article.
That being said, it is possible to file for bankruptcy without a lawyer. The only time you should do so, in our opinion, is if you understand the process can be complicated and even a small mistake either can delay the process or even negatively impact your ability to obtain bankruptcy protection in the first place. Are you aware that bankruptcy fraud is a serious crime and that if your bankruptcy forms are inaccurate or incomplete, you could be fined or imprisoned? If you’re still otherwise alright with the risks and feel you can accurately complete the process, it is possible to file without an attorney. If you are comfortable filing the bankruptcy and finishing through the process without missing deadlines and can otherwise follow all of the rules, by all means represent yourself. Even then, at least speak with a lawyer. Our firm offers free consultations so you have nothing to lose by at least giving us a call.
Attorneys Fees Can Be Costly
It is not uncommon to wonder if you need a lawyer when filing bankruptcy. Attorneys are expensive and if you’re already out of funds and that’s why you’re considering bankruptcy, you may not be able to afford an attorney. You’re not required to have a lawyer and you can file for bankruptcy yourself. Filing without a lawyer is just not always the best idea. If funding is a problem, consider asking for a payment plan or seeking legal aide through a local bar association. Also consider bankruptcy preparers who can’t represent in you in court or with creditors but who can prepare the necessary forms more inexpensively. Remember, there are also fees and other costs associated with bankruptcy regardless of whether you hire an attorney or not. The filing fee is usually around $300 – depending on chapter and State. There are also court-mandated credit counseling courses required before you file and within a certain timeframe of filing. Click here for an article on the costs of filing bankruptcy.
The idea of paying a lawyer when you are filing bankruptcy because of financial difficulties is understandably a little counter-intuitive. A bankruptcy lawyer typically will charge $1,500 for most chapter 7 bankruptcy filings and you can expect up to $500 in costs such as filing fees or costs of required courses you must take. With $2,000 saved up, you’ll almost always have enough to complete the process. This is usually going to require that you save up enough money to pay a lawyer before you are going to be able to file for bankruptcy protection.
Bear in mind, you cannot take on more debt to pay bankruptcy fees, court costs or your attorney. You’ll be prohibited from taking out a loan for any of those purposes and courts and attorneys cannot accept credit cards for that reason. Often, clients are paying for debt that will be discharged. If they are planning on filing, they may stop payments on their credit cards, medical bills, even their home or car if they plan on surrendering it, etc. They may save some of that money to pay the fees. There also might be assets that must be surrendered in the bankruptcy, so they are used to pay the fees prior. In other cases, they may get money from friends or relatives. If the debtor is truly indigent and below the poverty level, there may be pro bono services available or lower cost alternatives. In our view, you should do everything you can to hire an experienced and competent bankruptcy attorney.
Why Do I Need a Bankruptcy Lawyer?
Bankruptcy lawyers are your biggest ally in the bankruptcy process and help in many unexpected ways. Filing bankruptcy by yourself is possible but it isn’t a great idea. The Bankruptcy Code, with its local granularity, can get complicated. Local courts have specific ways of handling their case docket. A bankruptcy attorney can advise you on critical aspects of your case such as:
- What is the best time to file?
- Do you qualify under chapter 7 or do you need to file under chapter 13?
- Are all the technical requirements are fulfilled so that the bankruptcy will go smoothly?
- Is any of your property going to be exempt from bankruptcy under State or Federal exemption law?
- Are you going to be able to defend against potential creditor violations of the automatic stay to collect on the debt during bankruptcy?
- Will you be able to interface with the Court and the bankruptcy trustee like his documents titled when you do electronic filing
Bankruptcy is quite complicated. Perhaps your case is one of the more simpler ones that won’t involve some of these or other complications. Remember, however, that between identifying exemptions, dealing with creditors, valuing assets and working with the judicial system – your bankruptcy attorney can be a tremendous asset to obtain a bankruptcy discharge.
If you aren’t eligible for Chapter 7 or otherwise are pursuing Chapter 13 for a different reason, it is even more important to have a bankruptcy lawyer by your side. With Chapter 13, you’ll have to negotiate a payment plan after proving your income, expenses, and other financial conditions. If the bankruptcy trustee is not completely satisfied with your filing, they could object and in some cases, your filing could be dismissed. Then you’ll be dealing with a much tougher landscape attempting to re-file bankruptcy because there is a presumption of abuse the second time around. Furthermore, the automatic stay gets more limited each time.
We thought it might be helpful while on the topic to include the standard boilerplate on this topic from the main individual bankruptcy form. The federal voluntary petition for individuals filing for bankruptcy (Official Form 101) explains some of the ramifications of filing for bankruptcy without an attorney. The form states:
“The law allows you, as an individual, to represent yourself in bankruptcy court, but you should understand that many people find it extremely difficult to represent themselves successfully. Because bankruptcy has long-term financial and legal consequences, you are strongly urged to hire a qualified attorney. To be successful, you must correctly file and handle your bankruptcy case. The rules are very technical, and a mistake or inaction may affect your rights. For example, your case may be dismissed because you did not file a required document, pay a fee on time, attend a meeting or hearing, or cooperate with the court, case trustee, U.S. trustee, bankruptcy administrator, or audit firm if your case is selected for audit. If that happens, you could lose your right to file another case, or you may lose protections, including the benefit of the automatic stay. You must list all your property and debts in the schedules that you are required to file with the court. Even if you plan to pay a particular debt outside of your bankruptcy, you must list that debt in your schedules. If you do not list a debt, the debt may not be discharged. If you do not list property or properly claim it as exempt, you may not be able to keep the property. The judge can also deny you a discharge of all your debts if you do something dishonest in your bankruptcy case, such as destroying or hiding property, falsifying records, or lying. Individual bankruptcy cases are randomly audited to determine if debtors have been accurate, truthful, and complete. Bankruptcy fraud is a serious crime; you could be fined and imprisoned. If you decide to file without an attorney, the court expects you to follow the rules as if you had hired an attorney. The court will not treat you differently because you are filing for yourself. To be successful, you must be familiar with the United States Bankruptcy Code, the Federal Rules of Bankruptcy Procedure, and the local rules of the court in which your case is filed. You must also be familiar with any state exemption laws that apply.”
Chris Sawan is both a licensed attorney and a CPA which allows him to provide exceptional service to bankruptcy clients in Toledo, Ohio.
Dennis Sawan is a licensed attorney with a robust background interfacing with Courts making him a valuable asset for bankruptcy clients in Toledo, Ohio.
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