Do I Need a Lawyer to File for Bankruptcy in Pennsylvania?
Many people who are thinking of filing hesitate to hire a qualified Pennsylvania Berks County bankruptcy lawyer to help them. On the surface, that makes perfect sense: after all, you’re already in financial trouble, and the last problem you need is another expense. Right? Wrong. Do not fall into this trap. Avoiding legal help to “save money” will only wind-up costing you in the end. At Young, Marr & Associates, our attorneys and staff are dedicated to helping petitions avoid these costly mistakes.
The Dangers of Pro Se Bankruptcy Filing in Pennsylvania
Before we can address this topic in earnest, we need to address the elephant in the room. “But you’re lawyers,” you’re thinking. “Of course you would recommend hiring an attorney!”
The issue is, it is not just our firm that recommends against representing yourself, also known as filing pro se. Several parties would agree with us — including the United States Bankruptcy Courts. To quote the Courts on the matter (preserving the original bolding): “Bankruptcy has long-term financial and legal consequences — hiring a competent Doylestown bankruptcy attorney is strongly recommended.”
Bankruptcy filings are complicated and a petitioner must adhere to numerous federal laws, local regulations, and deadlines. So, what are those “long-term financial and legal consequences”? What mistakes — and penalties — can a lawyer help you avoid?
Bankruptcy Mistakes (And Their Consequences) in Pennsylvania
Bankruptcy code is notoriously complex — now more than ever. The rules and regulations deal heavily in technical jargon and fine-point calculation, and as a result, it’s incredibly easy for even a financially experienced person to make a mistake. In the words of one former Chief Bankruptcy Judge, who sees cases unfold first-hand, “…It is very difficult for a pro se filer to understand and successfully traverse the system.”
Thanks to the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, or BAPCPA, the preexisting laws have become even more complicated over the past 15 years.
While an especially savvy and proactive debtor may have been able to achieve pro se success prior to October of 2005, BAPCPA has changed the game substantially. To quote an older article published by Third Branch in 2011 but still relevant today, “These new requirements, combined with the pro se litigant’s unfamiliarity with general court procedure, made it more challenging to negotiate a complicated system.”
Common Mistakes in a Pennsylvania Bankruptcy Filing
As stated above, filing for bankruptcy is complicated. People filing pro se often make costly errors before their petition is filed with the court.
First, without a complete understanding of the pros and cons of each chapter of bankruptcy, a pro se filer is likely to choose a chapter that fails to achieve their financial goals. Not only are the specific requirements different for Chapter 7 and Chapter 13, but both are also designed for drastically different purposes.
For example, a quick internet search will show a potential petitioner that Chapter 7 is the most common type of bankruptcy filed. However, if the goal was to save a house from foreclosure or stop a car’s repossession, then filing for Chapter 7 will not achieve the desired results.
Even if a person is filing for Chapter 7 to eliminate debt, it is critical to know what debt is dischargeable. If someone goes through the time and effort to file for bankruptcy because they are behind on their child support or are overwhelmed by student loan debt, they are just wasting their time, effort, and money.
Another common error is failing to receive and document the required credit counseling. Before filing for any chapter of bankruptcy, a petitioner must complete a credit counseling course with a certified agency. If this is not done correctly and filed with the court, then your case could be immediately dismissed. Again, if you were filing to stop a sheriff sale, and even filed for the correct chapter, you could still lose your home if the credit counseling requirement was not met.
Everything you own becomes part of the bankruptcy estate when you file for bankruptcy. This means that a court-appointed trustee has the legal right to take possession of your property and sell it, disbursing the proceeds to your creditors. Fortunately, the Bankruptcy Code has provisions, or exemptions, that allow you to keep your property. In Pennsylvania, a petition must pick between the federal and state exemptions. Once you have made a choice, you are not permitted to change. Without the help of an experienced Pennsylvania bankruptcy attorney, you could end up losing property in Chapter 7 or paying more in Chapter 13 than you should have.
The “means test” is the calculation of household income that every debtor is required to undergo. It will determine if you are eligible to file for Chapter 7 and the length and amount of money you will have to pay through Chapter 13. This complicated form often makes or breaks a bankruptcy filing. If you complete the calculation incorrectly, you could find yourself in the wrong type of bankruptcy or paying much more than you anticipated.
If a pro se debtor navigates the pre-filing procedures, many traps are awaiting once the case has begun. Creditors have attorneys working on their behalf and the bankruptcy trustees are there to ensure a petitioner adheres to all required provisions of the Bankruptcy Code. This means that no one is working for you. While a judge might be more polite with a pro se filer, they will not be more lenient. You will still be expected to comply with all legal requirements and rules set forth in both the federal Bankruptcy Code and the local state rules.
No matter what chapter a person files for, they will be required to attend a 341 meeting. Before the meeting takes place, a petitioner is required to provide the appointed trustee many documents. If these documents are not forward timely or correctly, the case could be dismissed. Our experienced Quakertown bankruptcy attorney will ensure that the necessary documents are sent on time. Depending on the complexity of the case, the number of documents could be voluminous.
In Chapter 13 cases, each creditor will file a document known as “proof of claim.” These claims detail and provide evidence of the debts owed. In some situations, these claims are either wrong, filed late, fail to include the required evidence, or are for debts that are no longer collectible due to the statute of limitations. Without an intimate knowledge of what a proof of claim should include, it is impossible to file a sustainable objection.
Both creditors and the trustee might file motions to dismiss your case or otherwise impact it. A petitioner must file a timely response and, in many cases, appear in court to argue their position. It is not uncommon for a pro se debtor in Pennsylvania to either ignore or fail to understand the importance of these motions.
Consequences of Bankruptcy Errors in Pennsylvania
For starters, you could ruin your entire case. If you fail to list a single one of your debts, that debt may no longer be dischargeable. If you break rules like missing court dates, leaving out forms, or failing to file the appropriate fees (which are subject to change), your case could be dismissed by the judge.
Not only does that hurt your current bankruptcy, it also haunts you into the next. If your first bankruptcy case contains errors, your next bankruptcy could forfeit the protections of the automatic stay — protections many petitioners rely on to freeze devastating collection actions. Without the automatic stay, you have no protection from creditors.
If you misrepresent information on purpose, the consequences could be even worse than financial damage: you could be prosecuted for criminal activity. To once again quote the federal courts, “Individual bankruptcy cases are randomly audited to determine the accuracy, truthfulness, and completeness of the information that the debtor is required to provide. Please be aware that bankruptcy fraud is a crime.” Common examples of fraud include concealing assets and altering financial records.
Missed Benefits of Pennsylvania Bankruptcies by Pro Se Filers
This article has stressed the potential mistakes and consequences that pro se filers face. Another consideration is that the average person might be unaware of the many benefits filing for bankruptcy provides. Most people understand that the primary purpose of filing for bankruptcy is to eliminate debt. However, our knowledgeable Bucks County bankruptcy attorney will explain the other positive advantages to filing for bankruptcy.
For instance, many people filing for bankruptcy are also paying a monthly car payment. A petitioner’s car payment could be included in their bankruptcy payment and lowered to the fair market value of the vehicle. This means if you owe $10,000 on your car and it is worth only $4,500, you could potentially decrease the total amount you are obligated to pay. Now, this is not available in every bankruptcy case, but our office will review your situation to determine if you are eligible.
Many people have had collection and debt problems before considering filing for bankruptcy – perhaps they were even sued. In Pennsylvania, one of the most powerful tools a creditor has is obtaining a judgment lien on a person’s property. In many cases, it is possible to have these judgment liens removed from your home through bankruptcy. However, it does not happen automatically and a separate motion must be filed. Nearly every pro se filer is unaware of this benefit.
Our Pennsylvania Bankruptcy Lawyers Can Help You Today
Bankruptcy can help eliminate your debts, silence your creditors, and preserve your possessions — but only if your case is handled correctly. To schedule your free, confidential legal consultation with one of our experienced Philadelphia bankruptcy attorneys, call the law offices of Young, Marr & Associates today at (609) 755-3115 in New Jersey or (215) 701-6519 in Pennsylvania, or contact us online.