Is it Advisable to File for Bankruptcy Without Retaining an Attorney?
Should people try to do this on their own or should they always hire a bankruptcy attorney? I mean, how hard is it to file bankruptcy on your own and how risky is it?
Being perfectly candid, I think a bankruptcy would be a very difficult proposition and a very risky proposition for someone who doesn’t practice to undertake–not only a layperson but also an attorney who doesn’t practice bankruptcy regularly.
Mistakes Can Be Critical to a Successful Filing
The reason being and a big consideration for people is, once you become part of the bankruptcy process, for example, if you file a Chapter 7 bankruptcy, and you’ve made some sort of error. For example, you maybe underestimated the value of your home dramatically because maybe you based on a tax assessment, rather than the fair market value or you didn’t realize that your inheritance or your pending inheritance was not an exempt asset. You can’t just withdraw your bankruptcy. That asset now becomes part of the bankruptcy estate and you’re subject to losing it. You can’t just say, “Let’s have a do-over.” It doesn’t work that way.
Retain An Experienced Bankruptcy Attorney
So, to me, one of the riskiest things that a potential bankruptcy filer could do would be to not only do it by themselves but to use an attorney that doesn’t do a lot of it, because an error in bankruptcy can be absolutely critical.
It can force the sale of property, and you can’t just back out. You can’t just withdraw–only in rare circumstances, are you allowed to voluntarily withdraw your Chapter 7 bankruptcy. If there is an asset, you can’t withdraw it without bankruptcy court approval. It’s only really rare circumstances where bankruptcy courts will allow a case to be withdrawn in Chapter 7.
Bankruptcies can be complicated and technical areas of the law. As much as I’ve done it, for 26 years now, there are always new issues that arise. There are always new statutes that I’m reading about, ones that you don’t even necessarily consider. It is an area of the law that’s constantly evolving, I think, as compared to other areas of the law. And just as importantly, as you suggested, the consequences of making a mistake in bankruptcy are so much greater than, I think, most areas of the law. A mistake can really result in you losing assets, losing your home, losing other potential assets that you never expected would be at risk.
That’s why I put more emphasis on the initial meeting I know there are some attorneys who just simply hand someone a packet and ask them to complete the questions and bring it back with them. To me, by far, the most important aspect of representing someone is the initial consultation because that’s where you really have to delve into what’s appropriate, what isn’t and why.
I really think that’s where there are mistakes made by attorneys. It’s that they don’t use that time to adequately assess what is significant and what isn’t and what planning devices can be used to help make someone qualify for Chapter 7, who wouldn’t qualify today, certain other things like that.
☑ Been paying credit card balances that seem to never go down?
☑ Lost your job and are now having trouble keeping up?
☑ Attempted to work out a payment arrangement to no avail?
☑ Been notified of a mortgage foreclosure action?
☑ Been denied for a mortgage or other line of credit?
If the answer to any of these questions is “yes” then bankruptcy may be an option that you should consider.