When filing for bankruptcy, do you need an attorney? A bankruptcy case can be a daunting task to take on by yourself, but it can be done in some cases. Still, you may not want to rule out the idea of hiring a bankruptcy lawyer altogether.
The bankruptcy process is long, time-consuming, and pretty complicated. As a general rule of thumb, the simpler the case, the more feasible it is to go it alone without an attorney.
To help figure out whether you need an attorney when filing for bankruptcy, consider the following:
What Type of Bankruptcy Are You Filing?
As a first step, you need to decide between a Chapter 7 and Chapter 13 bankruptcy.
Chapter 7 bankruptcy is the most popular option, which:
- Liquidates assets,
- Discharges most of the debt, and
- Provides fast relief from creditors.
If you're filing a very simple Chapter 7 bankruptcy, you may be able to go it alone. But remember, even a simple case will require a great deal of paperwork, time and legal research on your part.
If you're not comfortable with attending hearings, filling out forms, collecting financial information or learning about laws, you should probably get a lawyer.
It's always a good idea to have an attorney if you have a more complicated Chapter 7 case. For example, if you own a business, earn above your state's median income level, have many assets, or have creditors who can make claims against you based on fraud, then you'll want to seriously consider lawyering up.
A Chapter 13 bankruptcy, on the other hand:
- Sets up a repayment plan,
- Lets you hold onto assets,
- Stops the foreclosure of a home, and
- Prevents cars from being repossessed.
If you need to file a Chapter 13 bankruptcy, it's almost always a good idea to hire an attorney. Chapter 13 bankruptcies tend to be much more complicated than Chapter 7 cases.
In fact, the vast majority of Chapter 13 cases filed pro se (without an attorney) are dismissed.
Figure Out Your Payment Options
A surprising number of Americans find that they're too poor to even file for bankruptcy.
If you're strapped for cash, however, there are a few options available. For example, you may qualify for legal aid or pro bono services. You can also petition the court to waive the filing fees.
Though 8 percent of Chapter 7 filings are done without an attorney, according to MSN Money, a poorly filed petition could wind up doing more harm than good for your bankruptcy case and long-term financial well-being.
Instead, you may want to look for an experienced bankruptcy attorney in your area who may be able to work with you and place you on a flexible payment plan.