Your Bankruptcy Attorney and You
As a bankruptcy attorney, I firmly believe that everyone who makes the decision to file for bankruptcy protection should do so with the help of an experienced bankruptcy attorney. Can you file without an attorney? Yes. Should you file without an attorney? Probably not.
There is no doubt that in some rare cases a person can file for Chapter 7 bankruptcy without the assistance of an experienced bankruptcy attorney and do just fine. There is also no doubt that a person should never file a Chapter 13 bankruptcy without an attorney. A Chapter 13 is far too complicated to file without the help of an experienced bankruptcy attorney.
In the Chapter 7 context, filing without an attorney is possible. Costs to file a basic Chapter 7 with an attorney can range from $800 plus the current $306 filing fee to above $2,000 plus the current $306 filing fee. In some cases this expense is simply too high for some people to deal with. Generally speaking, if you are unemployed, with no secured loans, no priority debt, under ten unsecured creditors all of whom are credit cards or medical bills, under $6,000 in assets, and under $8,000 of total debt filing without an attorney may work. Everyone else should think long and hard before filing without an experienced bankruptcy attorney.
I often look at an experienced bankruptcy attorney like insurance. It is always better to have insurance than to go through life without it. An experienced bankruptcy attorney, even in the Chapter 7 context, can provide benefits well beyond the cost. As an initial benefit, an experienced bankruptcy attorney can evaluate your case to maximize your benefit from the process. Remember, for most people this is the only time they will ever file bankruptcy and it is usually when they have no other options left. In many cases, people have exhausted their retirement and savings accounts trying to deal with their debt. An experienced bankruptcy attorney can help protect assets, reduce future payments on secured debts, maximize your ability to file for Chapter 7 instead of Chapter 13, and advocate for you if a problem arises. Finally, it is always helpful to have someone on your side during the process.
A Chapter 13 filing is a very different experience. In many cases, you may not even need to be in a Chapter 13 and if you are, an experienced bankruptcy attorney can help you determine what you actually have to pay each month under your plan. In many cases it is far less than you would have imagined. There are several more rules involved in a Chapter 13 and your creditors and Trustee take a far more active role in the case. In particular, an experienced bankruptcy attorney can review the proofs of claim filed in your case and make sure that you are actually paying back what you need to pay back at an amount beneficial to you. Creditors do make mistakes in their proofs of claim, more often than not.
While bankruptcy is designed to help get you back on your financial feet, do not miss out on the opportunity to set yourself up for success after bankruptcy. Keep in mind, in most cases; you will be spending $2,000 to get rid of over $30,000 of debt. That is a reasonable price for the benefit a well-designed bankruptcy can provide. Always remember, you get what you pay for.
Next week I will discuss the initial meeting and evaluating a bankruptcy attorney before retaining their services.