Do you really need an attorney to file a chapter 7 bankruptcy?
It is possible to file bankruptcy without an attorney. It is also possible to represent yourself in any legal matter without an attorney. The only obvious benefit to going it alone is the money you save in attorney’s fees. It is because many people do not understand the complexities of bankruptcy law that they decide to either file the case themselves or to hire a non-attorney bankruptcy petition filer.
By understanding the attorney’s role in a bankruptcy case a person may avoid the many potential pitfalls of filing a pro-se bankruptcy petition.
During the initial bankruptcy consultation and follow-up consultations, the attorney begins by analyzing the amount and nature of your debts to determine the best strategy. In some cases, it is better to avoid bankruptcy altogether and opt for a debt settlement plan or debt consolidation. An honest bankruptcy attorney will help the client fully understand the pros and cons of the different forms of relief. In most cases, the attorney will advise whether you qualify for relief under chapter 7. However in some cases, the client either does not qualify to proceed under chapter 7 or a chapter 13 is a much better fit. An attorney can help you make this determination. For example, a chapter 13 is a better fit for someone who is upside on their home or car. A chapter 13 also discharges some debts which are not dischargeable in a chapter 7. Further, a chapter 13 is more suitable for someone with non-exempt assets which would be lost in a chapter 7.
Once you have decided to proceed under chapter 7, the attorney will assist you in pre-bankruptcy planning. This planning consists of converting non-exempt assets into protected assets and is referred to as exemption planning. There is a fine line between lawful exemption planning and bankruptcy fraud. An attorney can help you protect your assets while avoiding a charge of bankruptcy fraud.
Bankruptcy is all about timing as well. There are several facts which affect the timing of the bankruptcy filing. For example, your attorney will review your last 6 months of credit card statements to determine whether creditors may have cause to file a complaint against discharge. An attorney will help you avoid this potential pitfall by properly timing the date of filing. It is also important for the attorney to gauge the timing so as to protect certain assets such as earned but unpaid wages and tax refunds.
Your attorney will assemble the information and data necessary to prepare the chapter 7 forms for filing. Prepare the complex petitions, schedules, statements and other chapter 7 forms for filing with the bankruptcy court. Your attorney will ensure that your assets are properly exempted within the petition. After the client has reviewed and sign the forms, the attorney will file the chapter 7 petitions, schedules, statements and other forms with the bankruptcy court, and, if necessary, notify certain creditors of the commencement of the case.
The attorney’s duties do not end with the filing of the bankruptcy petition. In many cases, unsophisticated creditors (e.g. former landlords and payday lenders) will attempt to exclude their debt from the bankruptcy. An attorney will quickly put a stop to any such attempts by advising your creditors that any such attempts are futile and could result in fines for violation of the discharge injunction.
In many cases it is necessary for the attorney to advise and assist their client in the filing of reaffirming certain debts. A reaffirmation agreement excludes certain secured debts (auto loans and mortgages) from the bankruptcy. The attorney will advise the client of the pros and cons to reaffirming debts and help the client complete the necessary forms. Depending on the client’s situation, it may be best to avoid signing a reaffirmation agreement while retaining the collateral by staying current on the payments. In other cases, it will greatly benefit the client to sign a reaffirmation agreement. An attorney will help the client obtain the most favorable terms possible such as lowering the interest rate and/or principle amount of the loan. Many debtors going it alone are needlessly forced into signing such agreements with less than favorable terms.
Many clients have liens against their property and they don’t even know it. When a creditor reduces their claim to a judgment the lien automatically attaches to the debtor’s real estate. These liens are not automatically voided in the bankruptcy even though the underlying debt is discharged. This is difficult for many debtors to understand. An attorney will avoid such liens in bankruptcy by filing the appropriate motions and notices with the court and creditors. This is a complex and time-consuming endeavor, however, it is necessary for the debtor to realize the full benefit of the bankruptcy discharge.
In some cases it will beneficial for the debtor to redeem a motor vehicle. By redeeming the vehicle, the attorney can save the clients thousands of dollars in interest and principle.
It is critical that you have an attorney present with you at the meeting of creditors. Your attorney will ensure the trustees and creditors do not overreach their bounds. It is very common for a trustee to cause the debtor to turn-over otherwise protected property as a result of minor discrepancies in the bankruptcy schedules. An attorney understands how to overcome such pitfalls and will quickly amend your schedules to avoid turnover.
The U.S. Trustee may request additional documentation to substantiate the information in your schedules. In some cases the Trustee will file a presumption of abuse. An attorney will assist the client in providing the necessary information in such a way as to avoid the presumption of abuse. If necessary, assisting the person in overcoming obstacles that may arise to the granting of a chapter 7 discharge.
Filing bankruptcy is sometimes the only way a person can get relief from their debts. An attorney will ensure you get a fresh start while ensuring you avoid the many potential pitfalls.
William Foster
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- Do you really need an attorney to file chapter 7 bankruptcy? - October 4, 2013