Do You Need an Attorney to File Bankruptcy?

When considering bankruptcy, many people question whether they need an attorney to help them. After all, they are on a tight budget, and the idea of paying an attorney may seem like yet another expense they must deal with. They may attempt to research bankruptcy and try to file on their own. However, filing a pro se bankruptcy can cause more problems than it solves.  

Pro se bankruptcies, or bankruptcies filed without representation, are usually Chapter 7 bankruptcies. Chapter 7 bankruptcies are liquidation cases, where a debtor may give up “extra” assets while retaining those that are legally protected.   In exchange the debtor usually wipes out most unsecured debts with some exceptions. Chapter 7 bankruptcies sound deceptively simple. However, not everyone even qualifies for a Chapter 7 to begin with. Chapter 7 bankruptcies require you to pass a Means Test, where your gross income for the last 6 months is calculated and must be below the median income for a household of your size, in your area. If it is above, the Means Test has to be filled out, with only certain deductions being taken. This is a complex calculation and often requires an experienced attorney to figure out. 

Say you are definitely below the median income, and pass the Means Test without having to do any extra calculating. Now, you need to look at your assets. What assets are protected by law in a Chapter 7 bankruptcy depends on where you live, and how long you have lived there. Each state is different, and some allow you the choice of state property exemptions, while others allow federal. If you have moved states recently, you may have to look at your prior state, and if you have moved a lot over the last few years, you will need to go through another step by step analysis to determine what property you have that is exempt. Which exemptions you use can determine if your car or home is protected, or whether you need to turn over your tax refund the next year. Again, an attorney who practices bankruptcy law is going to be the best person to determine what exemptions you use, and what property you have that will and will not fit under them. How property is valued for these exemptions also varies by state, and sometimes by courts within the state. A bankruptcy attorney who practices in your federal district will know these things, and if you have unprotected property, they can talk about your options. 

If you know what exemptions to use, and how to value property, what then? Do you still need an attorney. The answer is probably yes. If you have secured debt, like a car loan or a house loan, you need to determine how you want to deal with it in the case. Will you reaffirm, redeem, keep without reaffirming, or surrender the property? Which of those is even available to you in this situation? How does your budget affect your ability to keep secured property? What if you are behind on your car? All these questions come up, and an attorney can help give you your options. For example, if you are behind on your car and you need that car to go to work, you may not want to file a Chapter 7 at all! The general rule in Chapter 7 cases is that if you are behind on your car when you file a case, you have to surrender it. If that is the case, a bankruptcy attorney can tell you about Chapter 13 bankruptcy, where you can save a vehicle even if you are behind on payments. 

The above are just a few examples of all that goes into a Chapter 7 bankruptcy, often considered the “simpler” bankruptcy filing. It says nothing of how individual judges, trustees, and creditors tend to respond to filing, or of the other bankruptcy Chapters available. Perhaps the trustee who oversees Chapter 7 bankruptcies in your area is known for being very aggressive, and you have a family heirloom that is not protected by law. You may think it has too little value to matter, but an attorney would know that the trustee would disagree, and may suggest you file a different kind of case entirely to avoid the risk of losing your family treasure. A judge may have a local rule that affects how a trustee deals with certain property that could help you if you knew about it. These kinds of little things that only a practicing bankruptcy attorney would know are invaluable to your success in a bankruptcy.  An experienced bankruptcy attorney will spot issues you will not be aware of.  

Finally, the most persuasive piece of information you should consider when deciding if you need an attorney for a bankruptcy filing is that even bankruptcy attorneys hire other attorneys to represent them in bankruptcy proceedings! Even attorneys have to use the bankruptcy system and they know it is hard to be impartial when dealing with your own assets and liabilities, and that it is often a good idea to have a neutral third party oversee your case. In law school, future attorneys are told, “A lawyer who represents himself has a fool for a client.” If even a bankruptcy attorney will hire someone to help them file a case, it should be a strong indication that you should hire counsel for your case as well.

Feel free to call around to ask about pricing, how many bankruptcy cases an attorney has filed and in what district courts, how long they have been practicing bankruptcy, and if they practice it exclusively. Most bankruptcy attorneys are happy to tell you this kind of information, and it can help ensure you have a seasoned, local attorney who knows what they are doing. 

We have bankruptcy office in Wichita, Topeka, Lawrence and Overland Park.  Please call one of our bankruptcy attorneys for a free consultation.  

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