While hiring an attorney is not required if you decide to file bankruptcy, going “pro se” may not always be the best option for your case. Whether or not it is a good idea to declare bankruptcy by yourself depends on what chapter you filed for, how complex your case is, and what you’ve got to lose in a bankruptcy petition.
Self-representation in bankruptcy cases is possible but requires the filer to invest time and research about the process which is normally handled by a bankruptcy attorney. Below are some guidelines to help you decide whether or not you should try filing bankruptcy on your own.
Filing Bankruptcy Without a Lawyer
Debtors who file for self-represented bankruptcy cases are usually those who earn an income below their state median, have little or no assets, and face neither bankruptcy priority debts nor creditor lawsuits. More often than not, these means that the bankruptcy case is simple and you may be able to pull it off by getting legal advice from family or friends. An example is a Chapter 7 bankruptcy filer who wants to discharge her credit card debts and have no properties to lose.
However, if you have a long list of loans you need to pay back, then only certain debts are prioritized for repayment. The remaining ones will not be discharged by the bankruptcy court and you will still be responsible for paying these back to your creditors.
A priority debt or nondischargeable loan can be any of the following: unpaid balances for child support or spousal support, penalties imposed for breaking the law, state and federal taxes, domestic support obligation, loans for a retirement plan, or student loan balance. Sometimes, borrowers eliminate student loans by proving that paying will bring them “undue hardship”. However, this usually requires consulting with an experienced bankruptcy lawyer.
If you plan on filing for bankruptcy without a legal representative, make sure to check which debts you owe are dischargeable. Moreover, prepare for the possibility of facing a nondischargeability complaint from a creditor. This means that the lender suing you believes that your debt should not be forgiven because you either committed fraud, misrepresented data, embezzled, failed to declare all you lenders in your bankruptcy petition, or bought a luxury item a few days before filing bankruptcy.
If you suspect that your lending company could file a complaint, then it is better to have a bankruptcy law firm to handle your case instead of filing pro se. Otherwise, find a good self-help bankruptcy book to read, research the bankruptcy process and paperwork, and learn your state exemption laws along with the bankruptcy code.
When Not to File Bankruptcy Without An Attorney
While most Chapter 7 bankruptcies are straightforward, certain cases become complicated when the borrower owns a business, has a relatively high monthly income, assets that are worth a significant amount, or gets sued for debt fraud. These factors increase the risk of your bankruptcy application being rejected, or an ongoing case being dismissed.
Hiring a bankruptcy lawyer will be worth it if you want to protect most of your assets from being placed in the bankruptcy estate or stop impending lawsuits. Moreover, if you found out you’re not qualified for Chapter 7 and now consider Chapter 13, a legal guide is essential in getting the court’s approval for your proposed repayment plan.
A Chapter 13 bankruptcy helps you catch up on arrears, cram down your loans, or stretch the timeline for paying back nondischargeable priority debts within a three to five year period. This makes it difficult for a debtor unfamiliar with bankruptcy laws to do a pro se filing. The majority of Chapter 13 debtors who file without bankruptcy lawyers have their cases dismissed.
Where to Find Legal Help
Although the internet has been a go-to resource for bankruptcy basics and other information, nothing beats working with a bankruptcy expert with a long track record of success. If attorney fees are what’s stopping you from getting a lawyer, then take a step back and analyze if you have a simple or complex case.
If you think a Chapter 7 case can grant you debt relief, then filing bankruptcy individually is an option for you. But if there are complicating factors, you don’t have to face the risks alone. A trusted bankruptcy firm such as Grafton Firm, LLC can help you prepare your bankruptcy forms, create a plan to save most of your assets, represent you in court hearings, and guide you throughout the process.
Unsure how you should declare bankruptcy? Schedule a free consultation with one of our Maryland bankruptcy attorneys today.