You may regain control of your money by filing for bankruptcy. To manage the bankruptcy process alone, however, might be difficult given that a bankruptcy petition contains legal issues. Going prose is the formal term for filing the lawsuit without an attorney, however most experts advise hiring a bankruptcy attorney to handle your case.
What Kinds of Bankruptcies Exist?
The six categories of bankruptcy are outlined in the United States Bankruptcy Code. But when an individual files for bankruptcy, cases often fall into one of two categories: Chapter 7 or Chapter 13.
Debts are erased in Chapter 7, sometimes referred to as a liquidation bankruptcy. It is intended for those who have had difficulty making their regular debt payments. A court-appointed trustee liquidates your assets in a Chapter 7 case, sells the profits, and then distributes the money to your creditors. Some things, like your automobile or furniture for your home, can be excluded. Once Chapter 7 is complete, you are no longer liable for any of the debts included in the bankruptcy case.
The court authorizes a repayment plan in a Chapter 13 bankruptcy case, also known as a wage earner’s or payback plan, allowing you to pay off debts over a three- to five-year period. Once you have paid off these debts, you are no longer accountable for them. In this sort of bankruptcy, you could be able to preserve assets like a foreclosed home that you would otherwise lose in a Chapter 7 case. Notably, under the Chapter 13 payment plan, you must make all of your mortgage payments on schedule.
What Do Bankruptcy Attorneys Do?
A bankruptcy lawyer is an attorney who focuses on advising clients regarding bankruptcy, drafting their legal paperwork, and appearing on their behalf in court. A lawyer must have a degree in law and be admitted to practise in the state where they do business.
A lawyer may serve as your navigator through the bankruptcy procedure and provide guidance on issues like:
- To file for bankruptcy or not
- Which bankruptcy filing type to use
- How to file for bankruptcy and which forms are issued by the court
- Which debts are eligible for reduction or elimination?
- Whether or not you’ll be allowed to keep your house, vehicle, or other possessions after the bankruptcy process is through
A bankruptcy attorney can generally assist you in the appropriate legal way. Without the assistance of an attorney, you run the risk of making legal errors that have long-term financial repercussions.
What a Bankruptcy Lawyer Should Expect
What to anticipate if you engage a bankruptcy attorney is as follows:
- A formal contract in writing between you and the attorney. The agreement will probably contain a summary of the lawyer’s representation of you.
- A description of the terms of payment. For instance, would the attorney bill hourly or flat-rate fees? What will the costs be?
- Ongoing conversations you’ll discuss the way your case is being handled by the attorney.
- A consensus. You will decide on the manner and frequency of the attorney’s case updates.
- A list of the papers. You should get a comprehensive list of all the paperwork required for your bankruptcy case from the attorney.
Do I Require a Bankruptcy Attorney?
You may choose to represent yourself in court. Whether it’s the best choice for you will depend on your circumstances. Remember that hiring a lawyer increases your chances of filing for bankruptcy successfully. A 2018 research by the American Bankruptcy Institute found that Chapter 7 filers who represent themselves are over ten times more likely to have their cases rejected or part of their petitions for debt discharge refused.
Depending on the kind of bankruptcy you file, the impact on your credit record may last seven or ten years. As a result, it’s critical to think about employing a bankruptcy lawyer. Here are three explanations for why you may need one:
- You don’t feel comfortable handling the bankruptcy case by yourself. Being in court on your own might be daunting; a bankruptcy attorney can handle the legal issues on your behalf.
- Your concern is with the papers. There are usually several papers involved in court trials. For instance, submitting documentation beyond the due date or filling it out wrong might jeopardise your bankruptcy case. A bankruptcy attorney may manage all of the paperwork, including any required submissions of documents (such as credit card statements).
- You’ve had enough of debt collectors’ calls. A bankruptcy lawyer can handle debt collectors if they are bothering you nonstop. When you inform a debt collector that you have legal representation, the collector is supposed to speak to the lawyer instead of you.
Remember that if you can’t afford to employ a bankruptcy attorney, your local jurisdiction may be able to provide you with free legal assistance. To obtain free legal assistance in your region, get in touch with your local or state bar organization.
Bankruptcy without a Lawyer: How to File
Go pro se if you want to file for bankruptcy without a lawyer. How? Read on.
You should get acquainted with the Bankruptcy Code and the federal regulations governing the bankruptcy process before taking any further action. Just like a bankruptcy lawyer is required to do, the federal court hearing your case will expect you to adhere to the relevant bankruptcy laws and regulations. It’s important to note that the Bankruptcy Code and federal regulations are written in a manner that judges and attorneys will recognise, but that the typical citizen won’t.
Select the Bankruptcy Filing Type
The next step is to decide which bankruptcy filing type you should make. Chapter 7 (liquidation bankruptcy) and Chapter 13 (wage earners or repayment plan) are the two basic options for a person. The next step is to choose which bankruptcy court should hear your bankruptcy petition. Bankruptcies are handled by 94 federal court districts around the US.
Usually, if you file for Chapter 7 bankruptcy, you have to pass a “means test.” Which Chapter 7 or Chapter 13 you are eligible for will be determined by this exam. You must complete proper paperwork in order to pass this exam. Your income and spending make up a large portion of the information asked on the forms.
Participate in credit counselling
Remember that before you may file for bankruptcy, federal law mandates that you attend credit counselling from a source that has been authorised. 180 days must pass before doing this and declaring bankruptcy. You’ll get a certificate after the credit counselling session is over, which you must include with your bankruptcy file.
Complete the bankruptcy forms
Once you’ve decided which sort of bankruptcy you’re going to file for, you need to complete a court form called a Voluntary Petition for Individuals Filing for Bankruptcy (Official Form 101). Your name, address, Social Security number, an estimate of the value of your assets and liabilities (debts), as well as the types of debt you have, are among the details requested on this eight-page form.
When filing for Chapter 7 bankruptcy, you must submit a number of additional paperwork along with the bankruptcy petition and pay a filing fee unless the court decides to waive it. Within 14 days after filing, you must turn in another set of paperwork. All of these papers will request details such as a list of your creditors, a breakdown of the assets you hold, and an overview of your earnings and outgoings. There are additional paperwork that must be provided that are specific to a Chapter 7 or Chapter 13 case.
To complete the bankruptcy papers, you may receive assistance from a non-attorney petition preparer (such as a paralegal). However, a petition preparer is not permitted to provide legal counsel or represent you in court. In other words, you continue to represent yourself in court.
Confer With Debtors
You will normally work with a court-appointed bankruptcy trustee if the court approves your bankruptcy case. Typically, you won’t have much contact with the bankruptcy judge assigned to your case. Most of the time, a 341 Meeting with creditors is the only official procedure you are required to attend. Remember that you cannot get legal advice from the bankruptcy judge or court personnel.
Wait for a debt discharge
Between the moment you file for bankruptcy and the time your debts are discharged, a Chapter 7 case normally lasts four to six months. A Chapter 13 case, on the other hand, may take up to five years to complete since you are using a repayment plan to eliminate your obligations.
The benefits and drawbacks of declaring bankruptcy without a lawyer
The primary benefit of declaring bankruptcy on your own is that you won’t have to pay a lawyer’s fees. The drawbacks include having to complete several documents, maybe making errors on those forms, and failing to meet court-imposed deadlines. These drawbacks apply even if you are an attorney.
How to Locate a Bankruptcy Attorney
Choose a trustworthy and experienced bankruptcy attorney if you decide to employ one to handle your case. Here are some methods for locating a reliable bankruptcy attorney:
- Obtain referrals from dependable friends, family, or colleagues.
- The National Association of Consumer Bankruptcy Attorneys’ website may be searched.
- Consult the state or neighbourhood bar organisation.
- Visit a referral service for attorneys.
Regardless of how you locate them, consult with at least two attorneys before choosing the one who will handle your case. You should enquire about their bankruptcy case experience and pricing structure, among other things.
Making the choice to file for bankruptcy is important. After all, depending on the kind of bankruptcy, a bankruptcy filing stays on your credit record for seven to ten years. Think carefully about whether you want to handle your bankruptcy on your own, which is a more difficult option, or if you want to employ a lawyer. Whether you choose Chapter 7 bankruptcy or Chapter 13, you may start again with your financial management.
Frequently Asked Questions (FAQs)
Do you provide free assistance with bankruptcy cases?
Yes, low-income individuals who need legal representation in a bankruptcy case or who are managing a bankruptcy case on their own may get assistance from nonprofit legal services.
How long is a bankruptcy reported on a person’s credit report?
While a Chapter 13 bankruptcy may stay on your credit record for up to seven years, a Chapter 7 bankruptcy may stay on your report for up to ten years.
Which debts cannot be a part of a bankruptcy case?
Most student loans, most taxes, child support, and alimony are among the debts that cannot be discharged—meaning you are no longer compelled to pay them.