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Do I need an attorney to file for Bankruptcy?

Filing bankruptcy without a lawyer-Is it practical?

You are stuck in the web of debt and are considering filing for bankruptcy. You are considering filing bankruptcy without a lawyer because you can't afford one. But is this practical and right for you?

It's true. You don't need to hire an attorney to file for bankruptcy relief. You can always represent yourself in Chapter 7 or Chapter 13 bankruptcy as a pro se debtor.

But this isn't always a good idea. It's something to be done based on your individual case and situation. There are various factors determining if you should hire an attorney or not like:

  • If you are filing for Chapter 7 or Chapter 13 bankruptcy
  • Any case complexities
  • Your income, and assets
  • If you are competent or comfortable enough to handle your case

Read on to find out when it's okay to represent your case on your own, and when it's better to hire one.

When filing without a lawyer is okay

You have a better chance of filing, and competing for your case alone if you have a simple Chapter 7 bankruptcy. The case is considered simple if:

  • You have minimal or no property 
  • Your total income is less than the state's median income level 
  • You don't have priority debts or creditors alleging frauds against you 
  • You haven't paid some customers or made any recent property transfers

Even if it's a simple case, you need to defend your case to get a discharge without risking your property. You'll have to spend time on research and:

  • Understand bankruptcy laws 
  • Properly fill out various bankruptcy forms and schedules
  • Learn your state's exemptions 
  • Abide with all bankruptcy rules and procedures. 

When filing bankruptcy without a lawyer is a no-no

There are various situations where it's much better to hire a bankruptcy attorney to represent you. They are:

  1. Filing for Chapter 13 bankruptcy

Not everyone files for Chapter 7 bankruptcy. You may choose to file for Chapter 13 bankruptcy for various reasons like

  • Catching up on mortgage arrears 
  • Eliminating your second mortgage 
  • Reducing car loans 
  • To pay nondischargeable debs like support arrears or back taxes.

Sometimes you may be just earning too much and don't qualify for Chapter7 bankruptcy.

Whatever the reason may be, you won't be able to file Chapter 13 bankruptcy without an attorney. There are so many official bankruptcy forms to fill out and you have to design a proposed repayment plan that's fair to all your creditors. This requires a lot of bankruptcy knowledge and the help of specific software which advocates use.

And if you plan to strip your second mortgage or cram down a car loan, then you have to file for additional bankruptcy motions and paperwork. This is why it's always better to hire a professional and qualified attorney to handle your Chapter 13 bankruptcy case.

The process is so complicated that some attorneys consider themselves unqualified to handle a Chapter 13. Many Chapter 13 cases even end up getting dismissed by the court because they are filed without an attorney.

  1. Complications in your Chapter 7 case

Your Chapter 7 is considered complicated

  • If you own a business
  • Earn more than your state's median level
  • Own various assets
  • Have creditors who can make fraud claims against you.
  • Have nondischargeable debts

Other complications include having creditors who may challenge your discharge and if you had recently transferred some valuable assets out of your name.

With so many complications around, it's safer to hire an attorney to handle your case. You risk getting your case dismissed, your assets ending up sold or taken or may even have to face a lawsuit to determine your nondischargeable debts.

  1. Cannot handle the case alone

Even simple Chapter 7 cases are not so easy to handle. You have to do so much research, fill out papers, gather documents, understand bankruptcy and exemption laws, attend hearings and know your state's bankruptcy laws and procedures.

All this also takes up your valuable time. It's better hiring an attorney to represent your case if you don't have the time, or aren't confident about anything in the bankruptcy process. They will fight represent your case while keeping your best interests in mind.

  1. Can't afford a bankruptcy attorney

Some people consider filing bankruptcy without a lawyer just because they can't afford to hire one. This doesn't mean that you can't hire one. There are some options you can consider, like:

  • Getting help from your local free legal aid society or clinic
  • Finding, and hiring a pro bono attorney to handle the case for free or a discounted rate\
  • Including your attorney's fees in your proposed Chapter 13 repayment plan

Priority debt

If you wonder what priority debt is, it's debts you have to clear first if you have the money. These are nondischargeable debts, which aren't forgone with bankruptcy.

This may include:

  • DWI debts
  • Law violation fines and penalties
  • Domestic support obligations like child or spousal support
  • Certain taxes
  • Money borrowed to pay nondischargeable tax debt perhaps through credit cards
  • House owners' association dues accumulated after filing for bankruptcy
  • A previous bankruptcy's nondischargeable debt
  • Retirement plan loans

Even student loans may not get wiped out. You'll have to first prove it's difficult for you to repay it. Once again, filing and litigating a case to prove this can get expensive.

There's the risk of a creditor filing a nondischargeable complaint and asking the court to ascertain their debts' discharge. The creditor may win upon proving one of these conditions:

  • You hadn't filed all creditors in your bankruptcy petition
  • You had purposely harmed someone or their property
  • You had either stolen or embezzled funds
  • You had spent luxuriously just 90 days before filing for bankruptcy
  • You had lied or committed fraud like lying about your income

Looking at all these complications, and the amount of time and research you'll have to put into the case after filing bankruptcy without a lawyer, hiring a bankruptcy attorney seems wise.

Chapter 7 Bankruptcy

Chapter 13 Bankruptcy